Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

COVENT GARDEN MARKET [MONEY]

Resolution reported,
That, for the purposes of any Act of the present Session to make provision for the transfer of Covent Garden Market to a site in the London boroughs of Lambeth and Wansdworth, it is expedient to authorise—

(a) the issue out of the Consolidated Fund of any sums required to enable the Treasury to fulfil guarantees given by them with respect to the redemption of, or the payment of interest on, Covent Garden Market Stock or Covent Garden Market debentures; and
(b)any increase attributable to provisions of the said Act of the present Session in the sums which under Section 40 of the Covent Garden Market Act 1961

(i) may be issued out of the Consolidated Fund to enable the Minister of Agriculture, Fisheries and Food to make advances to the Covent Garden Market Authority;
(ii) may be raised under the National Loans Act 1939;
(iii) are required to be paid into the Exchequer and subsequently issued out of the Consolidated Fund and applied in redeeming or paying off debt or meeting such part of the annual charges for the national debt as represents interest.

Resolution agreed to.

CORPORATION OF THE TRINITY HOUSE OF LEITH ORDER CONFIRMATION BILL

Read the Third time and passed.

CLYDE NAVIGATION (SUPERANNUATION) ORDER CONFIRMATION

Bill to confirm a Provisional Order under the Private Legislation Procedure (Scotland) Act 1936, relating to Clyde Navigation (Superannuation), presented by Mr. Ross (under section 7 of the Act); and ordered to be considered upon Tuesday next, and to be printed. [Bill 17.]

GLASGOW CORPORATION (NO. 2) ORDER CONFIRMATION

Bill to confirm a Provisional Order under the Private Legislation Procedure (Scotland) Act, 1936, relating to Glasgow Corporation, presented by Mr. Ross (under Section 7 of the Act); and ordered to be considered upon Tuesday next, and to be printed. [Bill 18.]

Oral Answers to Questions — SCOTLAND

Rabbit Clearance

Mr. Baker: asked the Secretary of State for Scotland if he will seek to make membership of rabbit clearance societies compulsory in areas where such societies are functioning.

The Minister of State, Scottish Office (Mr. George Willis): My right hon. Friend will consider this suggestion.

Mr. Baker: I thank the hon. Gentleman for that reply, but I draw his attention to the fact that the whole of Scotland is a rabbit clearance area under the Pests Act, 1956. Will he take steps to ensure that all Scotland is brought into this category for the purpose of rabbit clearance?

Mr. Willis: The responsibilities in this are fixed on the agricultural executive committees, and we have no reason to doubt that they are doing their job.

North-East Scotland (Development Plan)

Mr. Baker: asked the Secretary of State for Scotland what plans he has for preventing depopulation of the north east of Scotland.

Sir W. Anstruther-Gray: asked the Secretary of State for Scotland when he will announce his plan for the Borders.

Mr. Wolrige-Gordon: asked the Secretary of State for Scotland (1) when he now expects to publish the north-east of Scotland Development Plan;
(2) whether he will make a statement on his policy to reverse the trend of migration from the north-east of Scotland.

Mr. Bruce-Gardyne: asked the Secretary of State for Scotland when he now expects to publish the Government's plan for the north-east of Scotland.

Mr. Willis: The Government's plans will be set out in a White Paper which my right hon. Friend hopes to publish at the turn of the year.

Mr. Baker: The National Plan foresees an average annual decrease of 20,000 in the working population of Scotland till 1971. Is not this an alarming tendency, and will it not bear most hardly on the periphery of the rapidly developing areas of central Scotland?

Mr. Willis: We are concerned about this bearing on the periphery, and part of the object of the plan is to do as much as possible to prevent that happening.

Sir W. Anstruther-Gray: Is the hon. Gentleman satisfied that the plan for the Borders should be delayed until the plan for the north-east of Scotland is ready, as so much research has already taken place into the Borders problem?

Mr. Willis: All these plans have to be fitted into one plan, otherwise they are apt to be contradictory and to fit into no pattern at all. It is precisely because of this that we are publishing a National Plan. The National Plan will take account of the needs of the various areas and of the reports which have been produced for these areas.

Mr. Wolrige-Gordon: Is the Minister aware that the North-East Development Plan has taken a very long time? Will he agree that plans are no substitute for action and that this problem of depopulation is serious and is still going on? Does he understand that there is urgent need to stem that tide and to start once again to revive employment in these distant areas such as the north-east of Scotland and other parts of Scotland in order to give our people a chance to work in the area where they were born?

Mr. Willis: I understand hon. Members' impatience. I only wish that they had shown the same impatience during the past 13 years.

Mr. Bruce-Gardyne: Is the Minister aware that there has been almost intolerable procrastination by the Government in this matter? Is he aware that I was

assured a year ago that this plan for the North-East would be published in the very near future? Can he guarantee that it will be published as soon as possible in the New Year? It has taken far too long already.

Mr. Willis: Yes.

New Town (Irvine)

Mr. Younger: asked the Secretary of State for Scotland whether he will make a statement on the creation of a new town in the Irvine area.

The Under-Secretary of State for Scotland (Dr. J. Dickson Mabon): Not yet.

Mr. Younger: Is the Minister aware of the great interest shown in this suggestion of a new town, particularly by the hon. Member for Central Ayreshire (Mr. Manuel), who I know is very interested in it? Does he realise that many planning decisions of all kinds are held up in the meantime? Can he give any indication at all of when we may have a decision on this important matter?

Dr. Mabon: On the first part of the question, yes, Sir. On the second part of the question, the report was received on 31st May. Discussions have gone on with the local authorities concerned. My hon. Friend hopes to have a meeting on 3rd December, and after that we shall see what is what.

Later—

Mr. Manuel: On a point of order. May I have your permission, Mr. Speaker, to ask a supplementary question on Question No. 3?

Mr. Speaker: I understand the hon. Member's interest. I am sorry that I missed the hon. Member at the time. It is now too late.

Ayr Bypass

Mr. Younger: asked the Secretary of State for Scotland when he expects work to start on the final stage of the Ayr bypass.

The Secretary of State for Scotland (Mr. William Ross): I regret that it has not been possible to find a place for this scheme in our trunk road programme up to 1970.

Mr. Younger: Does the right hon. Gentleman not recall his own promise a little more than a year ago that a Labour Government would complete this bypass? Does he not agree that there is great danger to people past whose houses traffic is now flowing? Will he please look again at the programme to see whether he can bring it forward?

Mr. Ross: I still hope that a Labour Government will complete this programme. I remind the hon. Member that he was so proud of the priority given to this project that he put it in his election address.

Canadian Centenary Exhibition

Mr. Clark Hutchison: asked the Secretary of State for Scotland what pro posals he has for visiting the Canadian Centenary Exhibition in Montreal in 1967 in order to encourage or assist Scottish producers and manufacturers to show their wares there.

Mr. Ross: None, Sir.

Mr. Clark Hutchison: Does the right hon. Gentleman know of the success of the trade mission to Australia recently? Why will he not not make preparations so that we may have similar success in Canada? Is he aware that the United Kingdom site at Montreal is extremely good? Does he recognise the wealth of good will towards Scotland by Canadian people?

Mr. Ross: I welcome the spirit of the hon. Member's Question about the Canadian Centenary Exhibition, but he will appreciate that this is a cultural and prestige exhibition. It is not related to trade at all; in fact, commercial exhibitions there are forbidden. But he should not take it that we overlook the importance of this, or, indeed, that we are overlooking the question of having commercial participation by Scotland in trade fairs at that time.

Artificial Limbs

Mr. Manuel: asked the Secretary of State for Scotland what is the number of patients requiring artificial limbs; and what is the average waiting period before limbs are supplied.

The Under-Secretary of State for Scotland (Mrs. Judith Hart): At 31st

October 176 patients had been measured for but had not received their first artificial limb, and 657 patients were awaiting a replacement limb. The waiting time varies, depending on clinical and other factors and any average period given would not be meaningful.

Mr. Manuel: Is the Under-Secretary of State aware of the many complaints which many hon. Members have had about the waiting period for artificial limbs? Is she aware of the great concern and anxiety which this causes and the trouble which is caused both to employers and workmen because they cannot get back to employment as early as they ought? This is something which ought to be hurried on by her Department as much as possible.

Mrs. Hart: I take the point made by my hon. Friend. I can assure him that I, too, am deeply concerned about the waiting period involved. We have made a number of efforts during the year, as a result of which there has been a considerable improvement in some directions, but I am by no means satisfied yet, and we are looking at the situation.

Mr. Stodart: May I ask the hon. Lady whether all possible resources in Scotland are being fully utilised for this purpose? I have in mind the supply of artificial boots for artificial limbs, which are made by the Princess Marie Louise Hospital. Is the order book of that hospital completely full at the moment?

Mrs. Hart: Most order books are full. We are looking very closely at the possibility of enlarging the field of production, and this is very relevant in speeding up the whole process.

Slum Clearance

Earl of Dalkeith: asked the Secretary of State for Scotland what plans he has formulated in the course of the past year for accelerating the pace of slum clearance.

Dr. Dickson Mabon: In response to approaches my right hon. Friend has made to them, Scottish local authorities are proposing to accelerate the rate of slum clearance, so that some 45,000houses are closed or demolished during the three years 1965 to 1967. He intends to present very soon a White Paper about this and other aspects of the housing programme.

Earl of Dalkeith: While thanking the Minister for that Answer, may I ask him whether he realises that this is another sad story of procrastination on the part of the Government and that a great many of us are profoundly dissatisfied that he has not shown a greater sense of urgency in pressing ahead with the solution of these tragic social problems resulting from the slums, particularly in view of the aggressive speeches made by his right hon. Friend when in Opposition?

Dr. Mabon: I am sorry that the hon. Member misheard me. The figure which I stated was 45,000 houses proposed for demolition in three years. The past average has been 12,000 a year. The present figure of slum clearance under this Government is 7,870 in the first six months. I think that the hon. Member is wrong

Justices of the Peace

Mr. William Hamilton: asked the Secretary of State for Scotland what steps he is taking to ensure that newly-appointed justices of the peace shall represent accurately a cross-section of the community from which they are appointed.

Mr. Ross: Advisory committees are asked, when they recommend persons for appointment as justices of the peace, to see that there are persons in the Commission representative of various sections of the community and I take into account the need to secure this when I am considering their recommendations.

Mr. Hamilton: Will my right hon. Friend give an assurance that he takes into account not only political affiliations and political colours in various areas, but the social and economic background of the individuals representing particular areas? Will he take into account the desirability, wherever possible, of appointing postmasters or sub-postmasters, because very often these are the people most in contact with the local community?

Mr. Ross: Yes. General guidance along the lines of the recommendation of the Royal Commission has been given to the committees in respect of this matter. I find that they do select carefully, but we must appreciate that the

paramount consideration must be fitness to discharge their judicial functions. I can assure my hon. Friend that I will take into account the matters which he has raised.

Procurators-Fiscal

Mr. Wylie: asked the Secretary of State for Scotland if he will seek to improve the terms and conditions of service for procurators-fiscal to encourage recruitment to that service.

Mr. Willis: In August last increases of salary, effective from 1st January, 1964, were awarded to various grades of the Procurator-Fiscal service, including the recruitment grade.

Mr. Wylie: Is the hon. Member aware that, with the development of legal aid in criminal cases, there is an ever-increasing demand on the Procurator-Fiscal service, and that unless recruitment to that service is speeded very serious danger arises that the administration of criminal jurisdiction in this country will be seriously prejudiced?

Mr. Willis: I am aware of certain difficulties in connection with this service, but there are shortages of legal civil servants in practically every sphere and I do not think they are any worse in this sphere than in any other.

Erskine Bridge

Mr. Wylie: asked the Secretary of State for Scotland if he will make a state ment on the progress of the Erskine Bridge project and the probable starting date.

Dr. Dickson Mabon: Dunbarton and Renfrew County Councils have agreed with my right hon. Friend's proposal that the bridge should be built as a trunk road project; and our intention is that work should start in the financial year 1967-68. My Department is now taking over the preparatory work from the joint committee formed by the two councils.

Mr. Wylie: Is the hon. Member aware of the importance of this project to the whole trunk road problem in Renfrewshire and that it is a matter in which the people of Renfrewshire have a very great interest?

Dr. Mabon: My constituents are thoroughly overjoyed.

Farm Improvement Scheme (Sludge Tanks)

Mr. Stodart: asked the Secretary of State for Scotland if a grant is available under the farm improvement scheme for sludge tanks which are made of synthetic rubber.

Mr. Willis: My right hon. Friend has had no applications for grant on sludge tanks made wholly of synthetic rubber. Any application would have to be assessed in accordance with the conditions of the scheme, including the test of durability.

Mr. Stodart: May I congratulate the hon. Member on the fact that his procrastination has not been carried into the field of sludge tanks? May I ask him whether he is, aware that applications have been made to his Department for grants for tanks which may not have been made wholly but which had been made at least partly of this material? Is it not the case that grants are available for these tanks under the farm improvement schemes in England and Wales? Is he satisfied with the co-ordination between his Department and the Ministry in seeing that there is uniformity in this matter?

Mr. Willis: There have been two applications and each of them was in connection with a tank in which the synthetic material was used as a lining. It was therefore not made wholly of synthetic rubber. There is nothing against the use of this material if it measures up to the requirements of the scheme.

Shellfish (Rail Transport)

Mr. Grimond: asked the Secretary of State for Scotland what representations he has received about the refusal of British Railways to carry small consign ments of shellfish; what reply he has given; and what is his estimate of the effect of this decision on the shellfish trade in the North of Scotland.

Mr. Willis: I have received such representations, but I understand that small consignments of shellfish are carried in guards vans of passenger trains, provided there is room, and I shall reply to that effect. I appreciate that some fishermen are anxious lest this should result in delay and losses, but I have no evidence

that it has had any significant effect on the shellfish industry.

Mr. Grimond: Is the acceptance of these small consignments in the guards vans of passenger trains a new offer of British Railways? Will these people be charged the penal rates by British Railways which are being charged for a full van consignments? Has there been any exploration of other methods of moving them if this proves unsatisfactory?

Mr. Willis: Some of the fishermen are arranging their own schemes for the consignment of shellfish, as with other fish. As far as we can see, this seems to be working quite well. British Railways gave a three-month halt in the arrangements coming into effect to enable it to be done. The prices to be charged are as set out by British Railways in their scheme. No change was made.

Mr. Grimond: Is it a new offer?

Mr. Willis: This is an offer which was made originally.

Sheep and Lambs (Prices)

Mr. Grimond: asked the Secretary of State for Scotland what are the current average prices in Scotland for fat clean sheep and fat lambs this year compared with 1955.

Mr. Willis: For the last period for which this information is available, namely the four weeks ended 26th September, 1965, the average prices paid at Scottish auction markets for sheep certi-field for fatstock guarantee payments were for clean sheep 26·5d per lb. and for lambs 32·6d. per lb. The comparable figures for 1955 were 25·4d and 30·8d, respectively.

Mr. Grimond: From those figures, it is clear that the prices have risen very little. While one welcomes anything which keeps down food prices, because—

Mr. Speaker: Order. The right hon. Gentleman must ask a question.

Mr. Grimond: Is the Minister aware that the costs which these sheep farmers have to meet have risen very much—for example, transport costs? This may have a serious effect on the sheep farmer in Scotland unless a bigger profit is available to meet the extra costs.

Mr. Willis: These factors are taken into account at the time of the annual review. In the last Review White Paper it was pointed out that this section of the industry continued to show a good figure of profitability, so it would not appear that heavy losses are being incurred. But all these factors are taken fully into consideration.

Hospital Building Programme

Mr. Stodart: asked the Secretary of State for Scotland why it has taken over twelve months to review the hospital building programme; and when he expects to publish the result.

Mrs. Hart: There are many factors to consider in the review, and its later stages have to await Government decisions about priorities in expenditure. My right hon. Friend hopes to publish the results of the review by about the end of the year.

Mr. Stodart: Does the hon. Lady agree that, whatever has motivated her right hon. Friend in this matter, it is not the dynamic feat of energy which we were promised by the Administration? Can she give a firm and unqualified undertaking that the review will not affect in any downward direction at all the quinquennial expenditure in the two periods to which the Government fell heir in the plan of the last Government?

Mrs. Hart: I can reassure the hon. Gentleman that there will be no reduction in the total programme. We believe in a dynamic programme of social investment and, therefore, we must plan everything in integration.

Capital Projects

Mr. MacArthur: asked the Secretary of State for Scotland what is the number of capital projects in Scotland which are being slowed down in response to his circular letter to local authorities drawing attention to the Chancellor's state ment of 27th July; and what is the total value of these projects.

Dr. Dickson Mabon: Local authorities are not required to report to my right hon. Friend all projects which they have decided to defer.

Mr. MacArthur: Is the hon. Gentleman aware of the very wide interest in

these matters? Will he take some action to find out whether the Secretary of State's request for cuts is being observed by local authorities? Will he recognise that the Chancellor's statement in July and the Secretary of State's circular represented major changes in policy and that the House wishes to know what cuts are being made in Scotland?

Dr. Mabon: The answer to the first part of that supplementary question is, yes, to the second part, yes, and to the third part, no. In exemplification I would point out that the total borrowing in the three months August, September and October, apart from houses and schools, of course, was £8·3 million compared with £12·9 million in April, May and June. Without a disproportionate amount of work it would be impossible to give a complete list, although I recognise the hon. Gentleman's interest in the matter.

Teacher Training Colleges

Mr. MacArthur: asked the Secretary of State for Scotland what plans he has for providing extra teacher training colleges in Scotland.

Mrs. Hart: A large programme is in hand for the expansion and modernisation of the facilities of the colleges of education, including a new college for 900 students due to open at Hamilton next October. My right hon. Friend has under review the possible need for an extension of the programme.

Mr. MacArthur: Can the hon. Lady say whether the programme has been cut back by the Secretary of State's request to local authorities to hold back expenditure for six months and to plan for reduced expenditure in the next financial year? What effect will these cuts have on the supply of teachers in Scotland during the next critical years?

Mrs. Hart: There is only one area in which there is slight deferment, and this does not affect the number of places to be available next year. The unprecedented demand for places in the colleges requires us to look again at the programme for next year and the year following, and this is what we are doing.

Mr. Brewis: How many prospective students were unable to gain places at the training colleges at the beginning of the year?

Mrs. Hart: Because of the demand for places, it was necessary to limit acceptances to those who applied within the period and who were not late and to those of the correct minimum age. On that basis, we had to refuse 110 girls who applied for admission to the three-year diploma course and who were either under the minimum age of 17 or had not applied in time. That is all.

Marriages (Young Persons)

Mr. William Hamilton: asked the Secretary of State for Scotland how many marriages involving persons between the ages of 16 and 18 years occurred in each of the last 10 years; and if he will introduce legislation to raise the age limit.

Mr. Willis: The number of the marriages in which either one or both of the parties was 16 or 17 rose from 1,302 in 1954 to 2,938 in 1963. I shall, with permission, circulate figures for each year in the OFFICIAL REPORT. I am not aware of any general demand in Scotland for raising the lower age limit.

Mr. Hamilton: Is my hon. Friend using the argument that there is no demand for action as a reason for taking no action at all, because in that case the Judges Remuneration Act would never have gone through this House? Does not he think that the age of 16 is a very low age for this desperately lifelong commitment to be taken? Will not he reconsider the position? How long has this legislation been effective?

Mr. Willis: This was the common law of Scotland and was made statutory in 1929, so it has always been the law of Scotland. The question as to whether the age is too low is a matter of opinion. We have no evidence that there is any demand to change this law.

Following are the figures:
The number of marriages registered in Scotland
(a)where one or other of the parties was aged 16 or over but under 18

1954
1,302


1955
1,640


1956
1,815


1957
1,940


1958
1,960


1959
2,028


1960
2,316


1961
2,588


1962
2,683


1963
2,938

(b) where both the parties were age 16 or overbut under 18

1954
69


1955
113


1956
135


1957
132


1958
104


1959
113


1960
164


1961
189


1962
235


1963
304

Rivers and Lochs (Fishing Rights)

Mr. Doig: asked the Secretary of State for Scotland if he will seek to take all the rivers and lochs in Scotland into public ownership, abolish exclusive fishing rights and ensure that fishing for salmon and trout is equally open to all.

Mr. Willis: My right hon. Friend is considering the law relating to salmon and trout fisheries in Scotland in the light of the Report of the Hunter Committee and the comments he is receiving on it, but he is not yet in a position to make a further statement.

Mr. Doig: Is my hon. Friend aware that salmon fishing is now almost exclusively confined to the very wealthy and poachers and that the angling associations now believe that if the Hunter recommendations are implemented by the Government there will be the same position in relation to all fishing in Scotland?

Mr. Willis: The associations have been asked to submit their views on the Hunter Report to my right hon. Friend. They will, therefore, have the opportunity of putting their views at great length.

Road Accidents (Warning Signs)

Sir J. Gilmour: asked the Secretary of State for Scotland if he will circularize police forces in Scotland to ensure that all police and public service vehicles which are called to the scene of road accidents carry warning signs which can be put out to give advance warning of any obstruction caused by accidents.

Mr. Willis: It is already the general practice for police traffic patrol cars to carry warning signs. Emergency tenders of fire brigades also carry such signs.

Sir J. Gilmonr: Would the hon. Gentleman also ask that ambulances should do the same? They often have to stand at


scenes of accidents and if they carried these warning signs it might help to prevent further crashes from taking place.

Mr. Willis: They do not carry them at present. Only those authorised by the chief constables to do so can erect these signs. However, the point is worthy of consideration.

New Towns

Sir J. Gilmour: asked the Secretary of State for Scotland whether he will make a statement on the future management of new towns in Scotland after they have obtained borough status.

Dr. Dickson Mabon: Burgh status does not affect the functions of a development corporation which, as at East Kilbride, retains the duty of developing the new town to its planned size. It is important, however, that at all stages in the life of a new town the development corporation and all interested local authorities should work closely together.

Sir J, Gilmour: Have the Government any plans for the eventual handing over of these: new towns so that they are removed from the development corporations?

Dr. Mabon: It is too early to make a statement on this.

Mr. William Hamilton: Will my hon. Friend give an assurance that the terms of the New Towns Act, 1946, will be fully implemented and that we shall get full democratic control of these new towns by elecied authorities at the appropriate time?

Dr. Mabon: In principle that is the policy of the Government, but there is a transitional stage during which we shall have to sort out how that position is to be reached.

Civil Defence

Sir W. Ansrruther-Gray: asked the Secretary of State for Scotland whether he will make a statement regarding the future of civil defence; and whether the number of recruits keeps pace with the number of resignations.

Mr. Willis: The review of home defence referred to in the Statement of Defence, 1965, is not yet complete, and I cannot

anticipate the results. The active strength of the Civil Defence Corps in Scotland fell by 94 in the year ending 30th September, 1965, to a figure of 22,688.

Sir W. Anstruther-Gray: Will the Minister of State bear in mind that the delay in publishing this review of civil defence is very discouraging to people who are giving voluntarily of their time to doing this work?

Mr. Willis: I fully appreciate that, but I think the right hon. Gentleman would agree that this important matter should be given proper consideration and that we should not try to be too hasty about it.

Departmental Staff

Mr. Onslow: asked the Secretary of State for Scotland what increase or decrease there was in the staff of the Department under his control in the period 16th October, 1964, to 15th October, 1965; and what increase or decrease he anticipates in the period up to 15th April, 1966.

Mr. Ross: There was an increase of 448 in the staff of the Departments under my control between October 1964 and October 1965, and a further increase of 278 is expected by April 1966.

Fort William-Mallaig Road (Dual Carriageway)

Mr. Russell Johnston: asked the Secretary of State for Scotland when he will start work on the thirty miles of single carriageway still remaining between Fort William and Mallaig.

Dr. Dickson Mabon: We intend to improve the worst sections as far as possible by using minor improvement funds, but I am afraid that comprehensive reconstruction cannot find a place in the road programme before 1970.

Mr. Johnston: Is the hon. Gentleman aware that this is a narrow road which is causing very grave concern and great difficulty and is virtually endangering the whole future of Mallaig? There is also considerable doubt about the future of the railway. Can he assure us that he will bring pressure on the Minister of Transport to ensure that, if the railway goes, it will not go before the road is improved?

Dr. Mabon: I can give the hon. Gentleman the assurance that he wants in the latter part of his supplementary Question, provided that he is willing to accept that, while traffic has increased on this road, it is much heavier on the single carriageway Invergary-Kyle road. This is a matter of priority, as he appreciates, and we naturally want to concentrate our efforts there.

Hydro-Electric Development

Mr. Russell Johnston: asked the Secretary of State for Scotland when he will make a statement on the Government's policy concerning the future of hydro-electric development.

Mr. Buchanan-Smith: asked the Secretary of State for Scotland when he will make a statement concerning the future programme of hydro-electric projects in Scotland.

Dr. Dickson Mabon: My right hon. Friend hopes to make a statement very shortly.

Mr. Johnston: I welcome this announcement very much.

Mr. Buchanan-Smith: Is not this one other example of procrastination? We have waited a year for a reply and there is a hold-up of potential investment in the Highlands of £144- million as a result of the delay.

Dr. Mabon: I understand why the hon. Gentleman blushes when he says that in view of the past record of his own Government, which to a large extent caused this delay. Fortunately, my right hon. Friend will be in a position very shortly to make a statement which I hope will find acceptance throughout the House.

Edinburgh (Traffic Conditions)

Mr. Clark Hutchison: asked the Secretary of State for Scotland what assistance or advice his Department is giving to Edinburgh Corporation on traffic problems.

Dr. Dickson Mabon: My Department is represented at meetings of the working party which the corporation has set up to advise on the future traffic pattern in the city. The corporation also consults

the Department about short-term traffic measures.

Mr. Clark Hutchison: Is the hon. Gentleman aware that the traffic problems in Edinburgh are getting worse every day? What has happened to the ring road? Will he take up with the Minister of Transport the question of retaining the surburban railways, particularly in the light of experience in Canada and the United States, where they are being brought back? Will he see that we retain Caledonian Station, which is a valuable asset for railway purposes?

Dr. Mabon: I appreciate the point, but the problem hinges on the submission of the quinquennial review by the corporation, which is at liberty to commission any transportation study it wishes, but at the moment my Department is concerned about the procedure under the review. When that review comes forward will be the time to make decisions in principle on a comprehensive assessment of the situation, including the position of suburban commuters and the railways.

Rates

Mr. Edward M. Taylor: asked the Secretary of State for Scotland how many Scottish local authorities have now announced their rate poundages for the year 1965–66; and what percentage increase there will be in the total amount raised in rates by these authorities in the year 1965–66 compared with amounts raised in the year 1964–65.

Dr. Dickson Mabon: All Scottish local authorities have now, by Statute, fixed their rate poundages for 1965–66. There is likely to be an increase of slightly over 9 per cent. in rate income, or 7 per cent. increase in average rate poundages.

Mr. Taylor: Does the hon. Gentleman recall saying in Committee on 29th June that the probable increase in rates this year would be 4 per cent.? Why is it that, on housing and roads and other vital matters, he is proving to be such a bad prophet all the time?

Dr. Mabon: This is the only assessment that has ever gone wrong. But I would point out that it compares not unfavourably with the 8·6 per cent. increase in 1963–64 and the 19 per cent. increase in


1961–62. He must await the Government's next steps in this matter, including, of course, the legislation which we have promised will be introduced this Session.

Housing

Mr. Edward M. Taylor: asked the Secretary of State for Scotland how many houses were completed in Scotland in the 10 months ended Ocotber 1965; and how many it is estimated will be completed in the year 1965.

Dr. Dickson Mabon: About 28,500 in the ten months and around 35,000 in the full year.

Mr. Taylor: Does not the hon. Gentleman appreciate that this means a fall in the house-building programme this year of over 2,000? Does he also recall stating on the 1st June that it was wrong to say that house building this year would be less than last? Why has this further forecast of his gone wrong?

Dr. Mabon: The hon. Gentleman is committing a grave error. He must read again what has been said. There are several factors, and we have always stated them in the House. The principal factor in the number of house completions this year—and he and his right hon. Friends cannot escape responsibility for that—was the dramatic fall in tender approvals during the period April-September, 1964. It is worthy of note that at the end of last September houses under construction in Scotland by all agencies totalled 50,554 —an all-time record.

Mr. G. Campbell: Why, then, was the hon. Gentleman's estimate in the summer of a total of 37,000 so wrong, considering that it has been reduced to 35,000?

Dr. Mabon: Because it has proved far too difficult to get over the initial errors for which the hon. Gentleman himself was primarily responsible, when he was in my position, by failing to see that the rate of tender approvals was at the level of the preceding first quarter as compared with the second and third quarters over which he presided in his final six months of office.

Mr. Hendry: asked the Secretary of State for Scotland what is the number of houses being erected in Scotland by

private enterprise at the latest convenient date; and what was the comparative number being erected on the corresponding date last year.

Dr. Dickson Mabon: At 30th September, 8,100 houses were under construction for private owners, compared with 7,132 a year earlier.

Mr. Hendry: I congratulate the hon. Gentleman on the success of his policy in encouraging private ownership. Is he aware that many hundreds of young couples who had set their hopes on being able to buy these houses now find themselves unable to do so because of the financial policies of his right hon. Friend the First Secretary? What does the hon. Gentleman intend to do about it?

Dr. Mabon: I much appreciate the natural enthusiasm which the hon. Gentleman shows for the success with which the Government are reaching their housing targets. There is no short-fall of requests by young people for private builders' houses. The total of 6,051 houses already built in the first nine months of this year compares with the 5,559 built in the last year of the previous Administration.

Salmon and Trout Fisheries (Report)

Mr. Buchanan-Smith: asked the Secretary of State for Scotland when he will bring forward proposals following the Hunter Committee Report on Scottish Salmon and Trout Fisheries.

Mr. Willis: My right hon. Friend is awaiting the observations of many of the organisations he invited to comment and he will be studying the Report further once these observations have been received.

Mr. Buchanan-Smith: Is the hon. Gentleman aware of the extreme concern about these proposals among all sections of the industry, and particularly among those employed in it? Would he, therefore, bear in mind that a decision about the proposals should not be delayed if uncertainty is to be avoided?

Mr. Willis: I am aware of the concern, but I am also aware of the importance of the decision, and I should have thought that the importance of the decision warranted the matter being given proper and not hurried consideration.

A.74 (Dual Carriageway)

Mr. Monro: asked the Secretary of State for Scotland what are now the estimated starting dates for the reconstruction to dual-carriageway standard of the Underwoodhouse to Hill Tollbar section and the Hill Tollbar to Mossband railway bridge section of the A.74.

Dr. Dickson Mabon: Providing the necessary orders can be made in time, my right hon. Friend hopes that work will start on the Underwoodhouse-Hill Tollbar scheme in the spring of 1967 and on the Hill Tollbar-Mossband scheme a few months later.

Mr. Monro: Is the Under-Secretary aware that traffic conditions on this road are now intolerable? Why cannot he revert to the Conservative target of the summer of 1966?

Dr. Mabon: Because the last Administration set targets but did very little work. The fact is that on the Underwoodhouse to Hill Tollbar scheme it has been necessary to vary the line to achieve better engineering standards. The reason with the second scheme is that we hope that the junction arrangements at Gretna will turn out to be better than our predecessors tried to arrange.

Technical Colleges

Mr. Monro: asked the Secretary of State for Scotland to what extent the programmes in Scotland of building and extending technical colleges has been postponed or reduced by the Government' economic measures this year.

Mrs. Hart: The following two new further education colleges have been deferred for six months and will now start next spring: Telford District College, Edinburgh; Esk Valley Technical College, Midlothian.

Mr. Monro: Is the hon. Lady aware that any postponement of technical education in Scotland could have a serious effect on industry in the years to come?

Mrs, Hart: Yes, of course. But the point is that we think—in fact, we are quite certain—that the effect can be minimised, because the buildings can be partially occupied as they are completed. We are quite satisfied that there will be no serious repercussions from the delaying of these two projects.

Mr. Edward M. Taylor: Would the hon. Lady care to convey those comments to the Secretary of State for Economic Affairs who, in the debate on the National Plan, advised the House that Scotland was unaffected by the credit squeeze and cuts?

Mrs. Hart: As the hon. Gentleman knows perfectly well, Scotland is relatively unaffected. Indeed, most of Scotland is protected under the present Government against the kind of thing that happened under the last Government because of our recognition of the needs of areas of unemployment.

Local Authorities (House Purchase Schemes)

Mr. Hendry: asked the Secretary of State for Scotland how many local authorities in Scotland operate mortgage schemes for private houses; and how many have ceased such schemes during the past 12 months.

Dr. Dickson Mabon: Out of 108 local authorities which operate schemes of loans for house purchase, 96 have made loans during the past year. I have no knowledge of any decision to cease making loans.

Mr. Hendry: Will the hon. Gentleman do everything he can to encourage local authorities to operate these schemes to help the hundreds of young couples in Scotland who find themselves not able to buy houses for themselves? Will he do everything he can to encourage his right hon. Friend the First Secretary to make mortgages available at rates which people can afford to pay?

Dr. Mabon: I am sure that the hon. gentleman is not unaware of what the Prime Minister has said and of what both Housing Ministers have declared to be their policy. He will no doubt read that when the White Papers are published shortly. The 12 authorities in Scotland whom I have not included as making regular loans are mostly small burghs and lend only from time to time. However, we take the point. The hon. Gentleman is quite right, and it is the policy of the Government, and we shall pursue it much more energetically than our predecessors did.

Forth Road Bridge

Mr. Campbell: asked the Secretary of State for Scotland if he will now make a statement on the question of tolls on the Forth Road Bridge, following the experimental period of one year.

Dr. Dickson Mabon: I have nothing to add to the reply I gave to the right hon. Member for Berwick and East Lothian (Sir W. Anstruther-Gray) on 2nd November.

Mr. Campbell: Does the hon. Gentleman consider that the present rate of toll is likely to prove a handicap to plans for industrial expansion?

Dr. Mabon: The present toll? No. There is no such evidence. As for future arrangements, I indicated in my reply that there would be discussions. The Joint Board met on 27th October and considered the inescapable financial effects of the first year. In the 12 months starting 1st October, 1964, 4·6 million vehicles crossed the bridge—excluding the initial surge of traffic in the earlier month. In the nine months to 28th May, 1965, tine Joint Board was due to make payments to the Secretary of State's Department of £569,059. The payment it was able to make amounted to £248,359. Therefore, £320,700 has to be carried forward and added to the capital debt of £14.5 million. With those facts in mind, it is difficult to go further than I went in answer to the right hon. Member for Berwick and East Lothian (Sir W. Anstruther-Gray).

Oxgang Primary School, Kirkintilloch

Mr. Bence: asked the Secretary of State for Scotland how many new primary school places will be provided by the proposed Oxgang Primary School, Kirkintilloch.

Mrs. Hart: The school will provide 680 places.

Mr. Bence: Is my hon. Friend aware that in the burgh of Kirkintilloch it is feared that we may be repeating the errors of the previous Administration over the last 14 years and providing school accommodation to meet current needs and forgetting to provide for the future? Can my hon. Friend give an assurance

that she will not repeat the terrible blunders of the previous Administration but will see that school accommodation provides for future as well as present requirements?

Mrs. Hart: My hon. Friend will know of the study which we have sponsored during the last year into methods of forecasting need for school places arising from population movement. This study is now going on. It is concentrated on the Scottish new towns and the Cumbernauld Development Corporation and the education authority concerned is giving a great deal of help. That will indicate the importance the Government attach to the issue which my hon. Friend has raised.

Cumbernauld (Maternity Unit)

Mr. Bence: asked the Secretary of State for Scotland what plans he has for the provision of a maternity unit in the new town of Cumbernauld.

Mrs. Hart: The Western Regional Hospital Board's long-term plans for Cumbernauld's hospital services include the provision of a materntiy unit with facilities for both specialists and general practitioners.

Mr. Bence: Can my hon. Friend give an assurance that the provision of the maternity unit will precede the building of the hospital, as, with a birth rate of 28 per 1,000, there is an immediate and urgent need for maternity facilities in the new town? Will she do all she can to urge forward the building of this maternity unit?

Mrs. Hart: The exact starting date will, of course, be a matter for the regional hospital board's own assessment, but I understand that the general practitioners' maternity unit will be provided ahead of the consultant unit to which my hon. Friend refers. That should enable the immediate need to be met more quickly than would otherwise be possible.

Higher School Bursaries

Mr. Dempsey: asked the Secretary of State for Scotland if he is aware of the large number of higher school bursaries which have been refused; and, to avoid any further hardship, if he will


increase the ceiling value of these bursaries.

Mrs. Hart: My right hon. Friend has no evidence that education authorities are refusing higher school bursaries to pupils entitled to receive them. The rates are kept under review and we will be glad to consider any evidence of hardship the hon. Member may have.

Mr. Dempsey: Is my hon. Friend aware that it is estimated that nearly half the applicants for higher school bursaries in Lanarkshire this year have been refused? Will she bear in mind that that is due not to parental incomes being too high—because these are the incomes of ordinary people—but because the ceiling for bursaries is too low? Will she and the Secretary of State look into the matter?

Mrs. Hart: I am looking into it at the moment, as is my right hon. Friend. A number of factors are involved when secondary school children leave school earlier than they otherwise might. The economic factor is certainly very important.However, any particular evidence of hardship which my hon. Friend can supply will be very welcome in the study which we are making.

Education (Gaelic Courses)

Mr. Dempsey: asked the Secretary of State for Scotland if, in view of the introduction of foreign languages into Scottish primary schools, he will approve the introduction of the Gaelic language with a view to preserving Scottish culture; and if he will make a statement.

Mrs. Hart: It is open to any education authority to provide Gaelic courses in primary as in secondary schools. In Gaelic-speaking areas education authorities have a duty to ensure that adequate provision is made for the teaching of Gaelic language and literature and 4,125 primary pupils are studying it in these areas.

Mr. Dempsey: Can my hon. Friend see whether that information can be made known to all Scottish local education authorities? Is she aware that while French, for example, is being taught— and we welcome the introduction of the teaching of French in primary schools— in many primary schools in my district

Gaelic is not taught as a subject of instruction? Therefore, in the interests of her Scottish culture, will my hon. Friend make sure that this information is available to the education authority concerned?

Mrs. Hart: A number of pupils outside the area which normally speaks it are studying it. For example, at Glasgow, Edinburgh, Lanark and Renfrewshire just under 500 secondary pupils are taking it. Certainly the education authorities know their duties and power.

Mr. Russell Johnston: Is the hon. Lady aware that restricted experiments in Gaelic teaching in primary schools in the county of Inverness have been going on for some time? Would she take steps to make some money directly available and, if this is possible, to extend the area where this is being done? At present it is relatively restricted and the restriction is primarily financial.

Mrs. Hart: This is a matter for the education authorities concerned. They have a duty in it. The allocations of money which they have are supposed to provide for this, but I would be very glad to look at the particular point if the hon. Member will write to me about it.

Road Programme

Mr. G. Campbell: asked the Secretary of State for Scotland to what extent the road programme in Scotland has been reduced or postponed, outside development districts, as a result of the economic measures announced on 27th July.

Dr. Dickson Mabon: With minor exceptions, all road schemes outside development districts which were due to start in the six months from August, 1965 to January, 1966 are subject to deferment under the measures announced on 27th July. It is worthy of note that, of the whole Scottish road programme, 96·6 per cent. is unaffected.

Mr. Campbell: With nine trunk road schemes postponed, in addition to these local authority schemes, is it not deplorable that there should be any interruption of the Scottish road programme, which is so important to the development of all parts of Scotland, not just development districts?

Dr. Mabon: Obviously the hon. Gentleman has prepared his supplementary question before he heard my Answer. The fact is that 96·6 per cent. of the Scottish road programme is unaffected by these cuts. Scotland has been exempted to this degree because of the large incidence of development districts. We accept, as does the rest of the country, the sacrifices that must be made with regard to general policy to solve a situation which, after all, hon. Members opposite left to us.

Taxicabs (Licences)

Mr. Garrow: asked the Secretary of State for Scotland if he is aware of wide spread trafficking in taxi licences; and if he will seek power to take action to eliminate this practice.

Dr. Dickson Mabon: The control of taxicabs in Scottish burghs is entirely a matter for the magistrates and I do not think that further legislation is necessary.

Mr. Garrow: Is my hon. Friend aware that in the Glasgow region sums in excess of £1,000 are being paid, ostensibly for the purpose of buying a taxicab? In fact the major proportion of the sum is for the licence, because the vehicle in question has a market value somewhere in the region of £150 or £200. Does my hon. Friend conside: that this black market is a desirable state of affairs, or does he think that there should be action?

Dr. Mabon: If such a black market exists, then, of course, it is not desirable. But I think that the point is whether or not magistrates consider their powers adequate to deal with this. This is the substance of the question, and the answer is that the Secretary of State has no knowledge that the present powers are inadequate.

Unlicensed Clubs

Mr. Garrow: asked the Secretary of State for Scotland if he will now introduce legislation in order that unlicensed clubs may be brought under proper police supervision.

Mr. Willis: It would be difficult to justify making all clubs subject to police supervision; but, as I explained on 14th April, the operation of the Betting, Gaming and Lotteries Act, 1963, in its application to gaming clubs is under review.

Mr. Garrow: Is my hon. Friend aware that in Glasgow and other major cities of Scotland, in addition to gaming clubs, there are many clubs springing up, in attics and basements, which present a fire hazard to the general public? Is my hon. Friend further aware that the police and the fire service in Glasgow have expressed great concern about the upsurge of these clubs? Will he give the House an assurance that he will give further consideration to this matter?

Mr. Willis: I am aware of these facts and, as I pointed out on 14th April, we are preparing fire legislation which will be introduced whenever it is possible to do so. The wider issues such as the question of interfering with social clubs are very complex, but these are also under consideration.

Scottish-English Schools (Joint Projects)

Mr. Hamling: asked the Secretary of State for Scotland what discussions he has had with local education authorities on joint educational projects of a residential nature between Scottish and English schools.

Mrs. Hart: None, Sir. It would be for the promoters in England of such a project to canvass support direct from Scottish education authorities.

Mr. Hamling: Will my hon. Friend be prepared to receive a deputation of teachers—

Mr. Bence: From Woolwich.

Mr. Hamling: From Woolwich—who are interested in the project in Argyllshire, which may well be of inestimable value to Scotland?

Mrs. Hart: We are always delighted to help our friends over the Border, but on this occasion I would suggest that the best course for my hon. Friend to pursue would be to take it further with the education authorities in England and Scotland and then, if the point arises, I shall be only too glad to discuss it with him.

River Don

Mr. Hector Hughes: asked the Secretary of State for Scotland what plans have been made to purify the estuary of


the River Don at Aberdeen and to apply to it the new method of oxidation designed by the Shirley Institute, Didsbury, for cleaning up rivers which have been polluted by industrial waste from mills and factories.

Dr. Dickson Mabon: These matters are the responsibility of the Dee and Don River Purification Board.

Mr. Hughes: Surely the Minister has some power with regard to this river, which is not in my constituency alone; it borders another constituency. The new method of oxidation mentioned in my Question has been tried with great success elsewhere. To use it in the River Don would result in great benefit to trade, industry, commerce and to employment in Aberdeen city and county.

Dr. Mabon: I quite accept what my hon. and learned Friend says in this regard. I would strongly suggest that if he contacts the Board itself he will obtain a thorough explanation of all its plans, both in this regard and in others. I have a lengthy submission here, but I do not wish to ascribe it to the OFFICIAL REPORT at this stage and weary the House with it.

Mr. Hendry: Does the Under-Secretary of State not agree that this is a very complicated matter involving several local authorities, besides the river board, which I mentioned to him in detail at the beginning of last Session, in Committee? With a view to bringing an end to the procrastination between the Ministry and the local authorities, will he now—[HON. MEMBERS: "Speech."]— accept my invitation to visit the area for himself and see the extent of the nuisance—and smell the nuisance with his own nose?

Mr. Speaker: Order. The hon. Gentleman's supplementary questions must be shorter.

Large Estates (Sales)

Mr. Buchan: asked the Secretary of State for Scotland if he will refer to the Highlands and Islands Development Board recent sales of large estates, such as the Ben Alder Estate of 22,300 acres in Inverness-shire, with a view to using their powers to have such estates taken over by the Board and developed in the interests of the people of the Highlands.

Mr. Willis: I think that the initiative in this matter can appropriately be left to the Board.

Mr. Buchan: Will my hon. Friend bear in mind that many people in Scotland, particularly in the Highlands, are becoming outraged at this traffic in huge sections of our native land? Is it not time that this was brought to the attention of a public board in order to develop the full potential of this land, both in agriculture and forestry, in the interests of the people in this area where a real land hunger exists?

Mr. Willis: I have no reason to doubt that the Highlands and Islands Development Board will keep its eye upon these things and will, if it requires land in order to carry out its development plans, put forward proposals to acquire it.

Mr. Malcolm MacMillan: Is the Minister aware of a quite outrageous case at this moment which runs entirely counter to the Government's declared policy in setting up the Highland Development Board? A large part of the Island of Coll is being acquired by a Dutchman for the purpose, declared publicly by himself, of starting it as a sporting estate. Does not this run quite counter to everything for which the Government stand? Will he take some action?

Mr. Willis: I am aware of this case. If the Board decides that something should be done in Coll, it has all the powers to do it, in spite of the Dutchman.

Arbroath (A.92 Inner Relief Road)

Mr. Bruce-Gardyne: asked the Secretary of State for Scotland what request he has received from Arbroath Town Council to be allowed to proceed with the proposed new inner relief road on the A.92 forthwith; and what reply he has sent.

Dr. Dickson Mabon: The council asked last month to be allowed to start work, at a cost of about £20,000, on the first phase of the proposed inner relief road. My right hon. Friend has told the council to go ahead if it is fully satisfied that the road must proceed now.

Mr. Bruce-Gardyne: I thank the hon. Gentleman for that reply, but is he aware


that the delays imposed by the Departments have already involved the local authority in considerably increased costs, because of the purchase of property for the building of this road, and will he see that there are no further delays?

Dr. Mabon: As the hon. Gentleman knows, I have met the town council on this matter and we have given it the go-ahead on the first phase as early as possible. For the remaining phases, we will have to see how the provisional programme for 1967–69 goes.

Local Government Reorganisation

Mr. Gregor Mackenzie: asked the Secretary of State for Scotland, when the working party appointed to consider the reorganisation of local government will report; and if he will publish its findings.

Dr. Dickson Mabon: The working party of officials has prepared a summary of its work since its first report was published, which is being circulated to the elected members of local authorities who form the steering committee. The summary is not in a form suitable for publication.

Mr. Gregor Mackenzie: Perhaps the summary might be submitted to Members of this House who might wish to offer an opinion about it?

Dr. Mabon: I accept that, but I am afraid that the report is inconclusive. It contains no formal recommendations as such. Once my right hon. Friend has consulted the local authorities, he wishes to proceed from that to see what should be done to take a wide consensus of opinion.

Rating (Large Estates)

Mr. Buchan: asked the Secretary of State for Scotland whether he will refer to the Scottish Valuation Advisory Council the matter of the discrepancy whereby large estates in the Highlands with lucrative fishing and sporting rights are ratedat low levels.

Dr. Dickson Mabon: The valuation of fishing and sporting rights is a matter for the local assessors acting in accordance with valuation law. There is to be a general revaluation in 1966, and I hope my hon. Friend will agree that it would

be better to await the results of that before pursuing the matter further.

Mr. Buchan: Will my hon. Friend keep in mind that within land which is normally regarded as exempt because it is not productive there is very valuable and remunerative land which is used for shooting and deer stalking? For example, in Inverness-shire there is an estate of 22,000 acres on which only £330 is paid in rates despite large and lucrative fishing and deer rights?

Dr. Mabon: Yes, Sir. It would, however, be better to await the up-to-date 1966 figures before making a fresh evaluation of the position.

Oral Answers to Questions — QUESTION TIME

Mr. Rankin: On a point of order— [HON. MEMBERS: "Oh."]—which I submit, with the greatest respect, to you, Mr. Speaker. We lost three minutes at the beginning of this sitting of the House. Would it be possible now to have them back?

Mr. Speaker: As a Sassenach, I was about to congratulate my Scottish colleagues on their co-operation at Question Time. I appreciate the parsimonious economy of time on the Question of the hon. Gentleman. I have no power whatever to add three minutes to Question Time.

GAS AND ELECTRICITY SUPPLIES

Mr. Grieve: (by Private Notice) asked the Minister of Power whether he is aware of the effects that the gas and electricity power cuts have now had on industrial firms and what action he is taking to remedy the situation.

The Minister of Power (Mr. Frederick Lee): A number of firms in the area of the West Midlands Gas Board were asked yesterday to stop taking gas as a necessary measure in the interests of public safety. The Board is restoring normal supplies today, and all industry in the West Midlands should have full supplies for the night shift. The electricity boards were obliged in the late afternoons on Monday and Tuesday to disconnect some consumers in certain areas for short


periods. Both the electricity and gas industries are making every possible effort to bring in the additional capacity which is currently being installed or overhauled and will thus be better able to deal with a repetition of severe weather and high demand later in the winter.

Mr. Grieve: While thanking the Minister for the hope that he holds out at the end of the present crisis, may I ask him whether he is aware that gas supplies were cut off from the great Midlands motor car manufacturers without any previous warning in the middle of yesterday, thereby causing many thousands of men to be put off? Will he tell the House what was the cause of this and what steps he is taking to ensure that this situation is not repeated?

Mr. Lee: The cause was a major breakdown at Coleshill gas works and the late commissioning of new plant at Tipton, which meant that the West Midlands Gas Board was unable to cope with an increased demand of 40 per cent. It is not the case that firms were not warned; they were warned. Only when there was no response to that warning was it necessary to cut certain supplies.

Mr. Gresham Cooke: Could not the Electricity Generating Board import electrical current from Germany? The German factories close at four o'clock in the afternoon and, by their more efficient economy, there is surplus electrical power at four or five o'clock in the afternoon. Could not that be imported here?

Mr. Lee: No matter what expedients one resorted to now, one would still be faced with the fact that there was a shortage of investment a few years ago when the Conservative Party was in power which has never been made up. The position would be even better if hon. Members opposite would get their friends in private enterprise to honour the contracts and the dates of them.

Mr. Geoffrey Lloyd: Is the right hon. Gentleman aware that a gas shut-down of this kind is much more serious nowadays than, for example, in 1947, because there are now so many gas-automated furnaces used in the engineering industry of the Midlands, some of which take two or three days to warm up again

after such a shut-down, and that thousands of pounds worth of components will have to be thrown away and written off? Can the right hon. Gentleman say whether the gas boards will pay proper compensation to the firms concerned?

Mr. Lee: I cannot comment on compensation. I can promise a better performance than was done in 1962–63.

Mr. Lubbock: Will the Minister give a general direction to responsible boards and authorities to discontinue spending millions of pounds on encouraging members of the public to use appliances which are then not capable of being used because of these power cuts?

Mr. Lee: While I doubt whether I have power to intervene too far in this, may I say that I have a lot of sympathy with what the hon. Gentleman says, and I will do what I can to be of assistance.

Sir J. Langford-Holt: The Minister mentioned a major breakdown and lateness in commissioning. Could he tell the House exactly what these two items were?

Mr. Lee: I said that there was a major breakdown at Coleshill gasworks and the late commissioning of new plant at Tipton.

Sir J. Langford-Holt: That is where— not why.

Mr. Peyton: I must press the right hon. Gentleman on this. Does not he think that my hon. Friends and the rest of the House are entitled to a far more detailed statement of the causes of this very serious breakdown? He has made —I do not know with what backing— some aspersions about private enterprise concerns failing to keep to their contract dates. But do let us have full details about Tipton and about what happened at Coleshill. Does the right hon. Gentleman recall what his right hon. Friend the Minister of Transport asked my right hon. Friend the Member for Bridlington (Mr. Wood) in January, 1963, namely, whether he was telling the people that whenever we had a few days' cold weather in January we should immediately be short of gas? May I now ask the right hon. Gentleman: since there is a great deal more plant in operation.


provision for which was made by the previous Administration, what on earth will happen in January under this Administration?

Mr. Lee: The hon. Gentleman has good reason to know of the shortcomings to which I have referred. If he wants a list of the failures of private enterprise to comply with delivery dates, if he will put down a Question I will try to provide him with a full answer.

Mr. William Hamilton: Can my right hon. Friend say to what extent these cuts were due to failures of private enterprise to fulfil contracts? Were there default clauses in those contracts to provide for a situation such as this? If so, will my right hon. Friend ensure that they are fully implemented?

Mr. Lee: I could not give my hon. Friend details of a penalty clause. [HON. MEMBERS:"Why not?"] If hon. Members opposite are saying that the failures of private enterprise should be considered so endemic that we must have penalty clauses, I will accept that. But, as far as I know, there are no such clauses for this situation.

Mr. William Hamilton: Well, there should be.

Mr. Gurden: Is the Minister aware that this is yet another deterrent to export orders and that we have had hundreds of unofficial strikes as well as the trouble at the docks? Is he taking this matter to Cabinet level, because it is terribly important?

Mr. Lee: If the Tory Government's record in exports were half as good as ours, our balance of payments situation would not be as bad as it is.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order. I suspect that there is matter for debate here. May we move on to the next business?

PHANTOM AIRCRAFT (SPEY ENGINES)

The Minister of Aviation (Mr. Roy Jenkins): With permission, I would like to make a statement about the future of the Spey engine for the Phantom aircraft.
The House will recall that the decision to adopt this aircraft for the Royal Navy

was taken last year by the previous Administration following failure to achieve a version of the P. 1154 which would have been acceptable to both the Royal Navy and the Royal Air Force. At the time the engine had not been sufficiently defined for reliable estimates to be produced, and the cost assumptions which were then used have proved to be too low. When we took office, we became aware that the P. 1154 would not meet the R.A.F. time scale for a Hunter replacement, and in view also of the urgent need to contain the size of the Defence Budget, we decided to order the Spey engined Phantom for the R.A.F. as well.
The costs of developing and producing the version of the Spey required for the Phantom have increased substantially above the 1964 assumptions, and we have therefore found it necessary to carry out a most intensive examination of comparative cost and performance between Phantom aircraft with the Spey and aircraft with the existing American engine.
Although the aircraft with the American engine is adequate for Naval and R.A.F. requirements, the Spey offers a greatly enhanced performance and a greater potential for future improvement. In addition Rolls Royce have been prepared to negotiate guarantees on costs performance and time scale much firmer than have been achieved in the past. Against the greater cost of the Spey these considerations might not in themselves have justified its adoption. But we must also take into account the very great economic technological and industrial advantages of going ahead with the development and production of this very advanced engine, with its big export potential. In the Government's view these considerations are decisive.
I am therefore glad to inform the House that we have decided to continue with existing plans for the installation of the Spey in the Phantom.

Mr. R. Carr: May I first ask the right hon. Gentleman whether he is aware that a copy of his statement reached the Opposition only at 3.26 and that this really does make it very difficult to express any considered view? This is by no means an isolated example and applies not only to the Minister of Aviation but to Ministers generally.
Having said that, may I say to the right hon. Gentleman that we on this side warmly welcome this decision. We hope this is only one of many decisions which the industry and the nation are awaiting in this field, and that this is only the first of a number of decisions which will do something to restore confidence in the procurement policy of the Government in these fields.
May I ask certain specific questions? First of all, can the right hon. Gentleman tell the House something about the total costs involved in the Phantom plus Spey engine such as now envisaged compared with the costs involved had the previous Government's plan been proceeded with? Can he tell us something about any escalation in the price of the Spey engine? He referred to this in his statement, but I was not quite clear about his meaning. Is it the case that Rolls Royce prices have now escalated compared with the estimates which they put in when they were asked to quote for this development? Will he tell us when production orders will be placed? Finally, will he tell us when he will be implementing the other half of the Prime Minister's promise in relation to British equipment in the Phantom aircraft, principally avionic equipment?

Mr. Jenkins: On the question of the time at which the hon. Gentleman was given the statement, we always, of course, endeavour to meet the convenience of the Front Bench opposite and the House. In this case, in view of some singularly misinformed rumours circulating in the Press this week, I thought it essential, outweighing even the advantages of giving a good deal of advance notice, to make this announcement to the House at the earliest possible opportunity. That precluded a large amount of notice being given.

An Hon. Member: Very poor.

Mr. Jenkins: Is the right hon. Gentleman really saying he would rather have had a little extra notice, even though holding up the industry for 24 hours or more?
As for the other questions which the hon. Gentleman put to me, there is no reason at all to think that the saving over the programme which we inherited

from the previous Government will still not be substantial. Nevertheless, the reasons for cancelling the P. 1154 were not primarily those of cost, though the cost was great, and it was right at the beginning of the programme, but primarily those of the time scale. There was no prospect of the aircraft being ready when the R.A.F. needed it. As for escalation of Roll Royce costs, they were then found to be very substantially above the estimates which we inherited from the previous Government. We had decided, in the interests of the industry and the firm, to go ahead with this proposal, and I am glad the right hon. Gentleman welcomes that, but he should not under-estimate the inheritance which his right hon. Friends left us in this respect.
On the question of British equipment beyond the Spey in the Phantom, our policy remains as stated, and we are endeavouring, even at the cost of a premium, to keep as much British equipment as possible in, and I am hoping the results will be satisfactory.

Mr. R. Carr: Will the right hon. Gentleman answer somewhat further about when production orders will be placed and about the scale, because it is a fact that the aircraft industry has received virtually no production orders during the 12 months since the cuts were announced, and it is really a matter of great urgency that we move away from expressions of intent and get down to hard orders for purchasing, so that the industry can get down to cutting metal on a production scale.
Will he please also give the House, if not today, a little more information about this escalation of costs? Is it really a fact that Rolls Royce estimates have escalated compared with the specification of which we are now talking, or is it the case that the costs have gone up because the specification has changed? I think that this really is a matter of great importance to clear up, and we ought to be quite clear whether any reflection does fall on the efficiency of this great company.

Mr. Jenkins: So far as production orders are concerned, we will go straight ahead now with the Spey Phantom programme of development and production orders, because it is a very tight programme and we want the aircraft to be


in service by 1968. We have every reason to believe it can and will be in service by 1968.
As to the question of responsibility, I of coarse wish to say nothing to damage the position of Rolls Royce. It is largely because we appreciate the great importance of the industrial value of this firm that we have taken this decision which we have announced at the present time, but there is no doubt at all that the position was that the previous Government took a decision on an engine required to perform a particular task and that the cost of this engine proved to be very much larger than was expected.

Mr. Dalyell: Is it realised that we welcome the concept of guarantees in relation to cost, performance and time scale, but, after all the Public Accounts Committee has said about cost estimates being loo low in the past, what is the Ministry doing to improve cost estimates in the future?

Mr. Jenkins: As I indicated in my Statement, we have in the case of the Spey programme now been able to secure guarantees about costs, about the time scale and about performance that are quite different from those which it has been possible to secure in the past.

Mr. Lubbock: While endorsing what the Minister said about the great advantage of going ahead with the Spey programme, may I ask him what he estimates will be the saving in our balance of payments in the period of this programme? Secondly, how many naval Phantoms is he ordering, bearing in mind the agreement with the French over variable geometry aircraft, which provides for a carrier-based version of it? Is he planning to replace all the Hunters with the Phantom or giving any consideration to a British specification of the COIN type such as they have in the United States?

Mr. Jenkins: A number of these matters are, of course, matters for the Secretary of State for Defence. So far as the Anglo-French variable geometry project is concerned, to which we attach the greatest importance, there is no reason to expect that the Phantom programme will in any way get in the way of this project. We shall pay the most careful attention to that aspect of the matter.

Mr. Philip Noel-Baker: May I congratulate my right hon. Friend on his Statement and on his decision to make it today, and may I thank him for what he said about my constituents, the firm of Rolls Royce? It will be greatly appreciated in Derby.

Mr. McMaster: While welcoming this statement, may I ask the right hon. Gentleman whether he can say when the sub-contract work on other frame parts, including the tail of the Phantom, will be placed, bearing in mind the responsibility placed on the Government, in their own firm of Short Bros., to fill the gap created by the cancellation of the H.S. 681 and to place some of the frame work with Short Bros.?

Mr. Jenkins: I will bear this in mind, and I am glad that Short Bros, have secured this sub-contract. There is no question of delay in the placing of this or other sub-contract orders.

Several Hon. Members: Several Hon. Members rose—

Mr. Speaker: Order. I know we all like to debate Private Notice Questions, but there must be found other opportunities of doing so.

CONFERENCE ON ELECTORAL LAW

Mr. Speaker: On 12th May my predecessor announced that, at the request of the Prime Minister, he had agreed to preside over the Conference on Electoral Law, and on 23rd June he informed the House of the names of the Members who had accepted his invitation to serve on the Conference. The Prime Minister has invited me to take over the Conference in order that this work may continue. I have readily agreed to do so.

BILL PRESENTED

POST OFFICE (SUBWAY)

Bill to authorise the Postmaster General to construct a subway in the City of Birmingham, presented by Mr. Benn; supported by Mr. Boyden and Mr. Joseph Slater; read the First time; to be read a Second time tomorrow and to be printed. [Bill 16.]

QUEEN'S SPEECH

DEBATE ON THE ADDRESS

[SIXTH DAY]

Order read for resuming adjourned debate on Question [9th November]:
That an humble Address be presented to Her Majesty, as follows:
Most Gracious Sovereign,
We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.

Question again proposed

ECONOMIC AFFAIRS

Mr. Iain Macleod: I beg to move, at the end of the Question, to add:
But humbly regret that the Gracious Speech contains no measures likely to redeem the failure of Your Majesty's Government's economic policy and, in particular, of the policy on Productivity, Prices and Incomes, which imperils the standard of living and savings of Your people.

Mr. T. L. Iremonger: On a point of order. May I confirm, Mr. Speaker, that the Amendment in my name on steel nationalisation has not been selected?

Mr. Speaker: I can assure the hon. Member that his Amendment has not been selected.

Mr. Macleod: By tradition, no Opposition has any more confidence in the Government than the Government have in the Opposition, and at the end of the debate on the Gracious Speech it is customary for an Amendment to be moved by Her Majesty's Opposition which expresses that particular point of view. I should make it clear at once that this is an Amendment moved by the official Opposition. The Liberal Party will no doubt explain, as usual, at the appropriate moment, why it is going to support the Government, and I congratulate the Prime Minister on the cheapest piece of

political horse-trading in this century. Yet he has not even had to pay the price, as I understand it, of the electoral pottage which the Liberal Party hoped for.
There are three Amendments referring to steel which are not being called but which are, of course, relevant to this debate. I was naturally delighted that steel had not been a feature in this Gracious Speech—

An Hon. Member: Oh, no.

Mr. Macleod: Oh, yes, I am; and we know the reason which was given, the reason of priorities, which echoes the famous Socialist phrase which we all remember, and it is not surprising, perhaps, that the hon. Member for Ebbw Vale (Mr. Michael Foot) found that rather hard to take; but the point I want to put to the Prime Minister—I know he has to go in a few moments, and I am grateful to him for giving me notice of that—is a sentence he used when he spoke on 9th November, when he said:
Actions taken in good faith within the industry and in the normal course of business are unlikely to be challenged."—[OFFICIAL REPORT, 9th November, 1965; Vol. 720. c. 39.]
I hope he will take the opportunity, or that one of his Ministers will, to delete that word "unlikely". The steel industry is in quite enough uncertainty at the present time. He has said, if I correctly understand the exchanges he has had with his own side of the House, that steel nationalisation remains part of the policy of the Socialist Party.—[HON. MEMBERS: "Hear, hear."] Let us wait and see. I think he would agree that it is desirable that all the actions that can be taken and are taken in good faith should not conceivably attract any penalty in any circumstances in future.
The other point which my right hon. Friend the Leader of the Opposition mentioned, and which perhaps the Chancellor of the Exchequer might like to refer to when he winds up the debate, is in the paragraph in the Queen's Speech which says:
Steps will be taken to improve the arrangements for providing incentives for industrial investment…
I ask again the question which my right. hon. Friend asked. Are those words, "arrangements for providing" simply tautologous, in which case what will be


improved—I hope they will be— are the incentives themselves, or is all that is planned some improvements in the arrangements? That is a small point which the Chancellor can make clear tonight, but I think it important.
I turn to our Amendment. I shall not spend too much time tramping over the ground we have debated so often, and will debate again no doubt when the next General Election comes, of the exact responsibility and where it lies for 1964 and 1965. I think the House will agree that the start of this particular period of reflation which came to a halt in the first quartet of this year—I think I am right in saying that the production figures for September were released a few minutes ago and are down again. [HON. MEMBERS: "Oh."] I think that is correct. The figure, I am informed, is 131, dropping from the 134 of January. This particular period of reflation clearly started. I think we will all agree, mainly with the Budget of 1963. That Budget stimulated consumer demand by about 2 per cent. The public investment programme was increased in line with the proposals made by the N.E.D.C. for its 1961–66 targets and private investment was at the time encouraged. Looking back, with of course hindsight, the verdict of the O.E.C.D. on the two years is as follows:
In retrospect then, the expansionary policy measures taken at the beginning of the expansionary phase must clearly be judged to have been excessive. That they were so was not apparent to many observers at the time.
Indeed, that is so, and it is also true, as the O.E.C.D. admits, that it itself was amongst those who did not judge them excessive at the time, as the Report for 1963, the annual survey, makes clear.
At all stages, as the Prime Minister will know, he agreed with the analysis of my right hon. Friend the then Chancellor of the Exchequer when he said in April, 1963, that economic expansion would entail a temporary rise in imports. The Prime Minister then said:
I think it is perfectly reasonable and sensible to finance such a movement out of our reserves or out of our borrowing facilities in the I.M.F. and elsewhere.
The Swansea speech endorsed that approach and when my right hon. Friend —turning now to the 1964 Budget—

warned of the possibility of a deficit on the balance of payments and said:
Provided that it is temporary this should give rise neither to alarm nor dismay. … it is a predictable accompaniment to a vigorous rate of growth which all of us are committed to seek.
Over and over again the Prime Minister, in interviews, in speeches, in his speech, for example, to the T.U.C. on 7th September, endorsed that analysis. He said at the time:
this trade gap means a deficit on our current balance of payments of £500 million a year.
In fact it turned out to be £412 million. The clear evidence of that is that the Prime Minister knew very well all the time what the figures were. He knew how the problem was being dealt with and he thought that the right methods were being selected to deal with the problem. He knew that there was no crisis and he said so, and called for no restrictive measures before the election. Nor did he scale down the Labour Parly's lavish preelection promises.
There is one small point which should be made. On two occasions the Prime Minister and my right hon. Friend the Member for Barnet (Mr. Maudling) have clashed in this House on the question of the issue by Her Majesty's Treasury in the middle of the election last year of the United Kingdom balance of payments, the article which was published in "Economic Trends". When my right hon. Friend said that he had published this in the middle of the election, the Prime Minister replied:
Yes, and in the middle of the night.
If that meant anything it was an accusation either against an unnamed civil servant in the Treasury or against my right hon. Friend the then Chancellor of the Exchequer. He was asked to withdraw it and he refused to do so. Now we have the comparable paper for 1965. I have it in front of me. It was issued by Her Majesty's Treasury and it says, in red type:
please note embargo. Not for publication broadcast or use on club tapes before 0030 hours.—
in the middle of the night.
We came to the General Election in 1964 without a crisis of confidence. As the Prime Minister knows very well, sterling held throughout the election and held


throughout the immediate post-election period and on into November. Then the mistakes began. In our view, the first of those mistakes, although it did not affect confidence, was the formation of the Department of Economic Affairs.
I personally had no objection; indeed I think it an excellent thing to refresh the still waters of Whitehall from time to time with some people coming in from outside. I did not object on those grounds at all. But the result of this was that the Chancellor of the Exchequer was, for a time at least, reduced to counting candle-ends. He was removed from his chairmanship of the N.E.D.C. and removed even from membership of the N.E.D.C. He was the first Chancellor—his Budget in April was proof of this—who had no true responsibility for the economy. The Chancellor would be less than human if he did not resent this, and he is a very human man. I am bound to say that he was saved. He was saved partly by the pressure of events and also saved by the skill of his Department, because the Treasury knights slew the foreign dragons by one of the prettiest pieces of knifemanship we have seen for many years. I think the Chancellor would be less than human if he did not chuckle a little about that.
Secondly, there was the handling of the import surcharge. I understand that we are to have a day's debate on that in a few days' time and I need not develop my argument on that particular theme, but what the House as a whole must know beyond doubt is that, apart from the merits, the handling of it came as the gravest possible shock to confidence abroad.
Finally in this particular phase, we had the autumn Budget. That autumn Budget, as many of my hon. and right hon. Friends have pointed out, was basically inflationary. It was an inflationary Budget imposed upon a potentially inflationary situation. It was not inflationary in the figures and it may not have been inflationary in intent, but it was inflationary in effect.
The Chancellor, and indeed many hon. Members, will have read in the May issue of the National Economic Review an extremely interesting article which shows, I think with great clarity—the point was well made by my hon. Friend the Member

for Scarborough and Whitby (Sir A. Spearman) in the first day's debate on the Address—that if in theory we balance consumption and taxation, they may be balanced for the first year, but immediately after that the inflationary effect becomes very marked.
The last point I want to make about the errors of those early months was the double-talk that went on from every single Minister at all times. The classic example of this was the Chancellor himself saying that he hoped the 7 per cent. Bank Rate would not work through to the domestic economy. One might well ask what the object of it was. The observations that he made helped to weaken confidence abroad.
So, viathe Budget of April, we came to the July measures. It has never been cleared up yet, although the Chancellor and I have had at least one exchange on this in the House of Commons, why these appeared in their particular guise and with this particular timing. The Chancellor will remember the famous sentence he used when he said that he was restraining himself from taking further measures. He in fact restrained himself for about a fortnight and then we had the measures which came at the end of July. It was put around at the time that he had added this sentence as it were to his brief, or impromptu notes, because he was tired.

The Chancellor of the Exchequer (Mr. James Callaghan): The right hon. Member said that.

Mr. Macleod: I took it from the Press. [HON. MEMBERS: "Oh."] I thought it was the kindest explanation there was; I cannot think of any other. If the Chancellor has any, by all means let us have it.
What is quite clear is that that one unguarded sentence of his did the country a very great deal of damage indeed. There is no question that once more the tide of confidence turned in full measure against the £. It is my belief, and I have heard no refutation of this, that that stemmed exactly from that particular sentence in that particular speech.
We have had a very expensive year's education as far as the Chancellor is concerned, because there can be no doubt that part of the load which this country


has to bear comes from the folly of the words and part from the fragmentation of the action that in this year the Chancellor has had to take. Let us see what the position is at the moment. I hope that when he speaks the First Secretary of State and Secretary of State for Economic Affairs will be able to confirm or deny the information I was given about the production figures.
The two main claims of the Government are that they have saved the£ and the balance of payments position has substantially improved. As far as the first is concerned, what they have been able to do is to obtain extended overdraft facilities. The Bank of England—and this is quite right—acting with the assistance of the American Treasury, persuaded the bankers of the world—I am delighted that they did—that devaluation was against international interests, and therefore these facilities were provided. The test comes now whether we can properly use that time so provided to strengthen our economy. When the Chancellor said that the battle for the £ was won but the battle of the economy still had to be won, I understood the distinction he was making, but I am sure he will agree that he cannot be confident about the first until the second objective is also secured.
What, therefore, of the second claim, that the Government have substantially improved the balance of payments situation? Here we must look at the two aspects of the balance of payments; the capital account and the current account. What is happening on current account is that the penal taxation which the Government are proposing to apply to our overseas investments has forced the sale of some of those investments and the money has come back to London. This is of immediate short-term help, but, of course, in the long term it weakens the nation. And the improvement on capital account is largely due to the Government forcing investors to sell part of the £11,000 million of overseas investments of which the Prime Minister boasted in New York last March. I wish he had boasted of those assets a year ago.
On current account, although month by month there is a considerable adverse balance of trade—our imports are far higher than our exports—the Government point to the improvement that has taken place. It is of the first importance that

we should be clear just what the reasons are for that improvement. One of the main reasons is, of course, that the prices of our exports have gone up and the terms of trade have moved sharply in our favour. The price index of our imports in September was lower than in January, whereas the price index of our exports was nearly 2 per cent. higher—I calculate about £11 million for that month, on the sort of figures which we have seen in recent months—than in January. Even that— and that accounts for an enormous amount of the improvement—presents a precarious position because if the price index of exports continues to rise, the volume may some day start to fall.
Besides the improvement in the terms of trade, there is another matter which we must take into account. That is the position in relation to stockbuilding. The National Plan states on page 69:
The current account deficit reflected a very rapid rise in domestic demand, which included … abnormally heavy stockbuilding.
In a year in which the Government have had the benefit of the abnormally heavy stockpiling of the previous year and the benefit of a considerable improvement in the terms of trade, we must see the general improvement in our balance of payments in a realistic light. This worries the Chancellor and all hon. Members who are concerned with the future of the economy, wherever they may sit in the House.
I therefore put this point to the Chancellor. One of the keys to this matter is, of course, the question of exports. At the meeting of the Institute of Directors the other day the Chancellor said that if people had ideas for improvement in this sphere they should put them forward. I appreciate that because, from my fairly short experience, I know that there is nothing more difficult than the task of finding ideas which one can use for export promotion.
Sir Donald Stokes, who has a wonderful record in this sphere, paid high tribute to the Government's export: rebate. I am sure that many firms have found that very welcome indeed, but I question whether it has led to additional export orders. This, of course, should be the objective of any money spent. I wonder if it would not be right for us to turn from the impersonal to the personal in this matter and see if we cannot find a


more direct incentive which will encourage the sale of our exports abroad.
My hon. Friend the Member for Worcester (Mr. Peter Walker), in his speech at our Brighton conference, referred to this and it was also mentioned in a leading article in The Timestwo or three days ago. We have been studying whether it is possible for an Income Tax rebate to be given to export directors and salesmen for the period for which they are abroad. I am a great admirer of Harold Macmillan, but I do not think that the phrase "Exporting is fun "was the best of his slogans. Exporting is hard work and presents great inconvenience to many of the men, and their families, who are involved in these activities. If often means living out of a suitcase, going from 'plane to 'plane and hotel to hotel. An immense amount of personal inconvenience is attached to it.
I say frankly to the Chancellor and the First Secretary of State that we are not yet satisfied—and we have been studying this matter carefully—that such a scheme could be made watertight. The opportunities for abuse are obvious; one might consider the possibility of someone obtaining a rebate when he had not genuinely been seeking exports. However, the scheme sounds an attractive idea, for it would involve the giving of a very personal tax incentive to the men who really are spearheading our export drive. I hope that the Chancellor will consider this matter and will, in due course, give us his views. All I ask is that he should not rule it out at this stage simply because of the possibilities of abuse—which are, as I say, obvious to all hon. Members who are interested in this subject.
We refer particularly in the Amendment to the failure of the policy on productivity, prices and incomes. So far I have been dealing with the Chancellor of the Exchequer. I now turn to the First Secretary because while all this was going on—while this Socialist year was under way—there, down on the ranch, as they say, the First Secretary was hard at it putting forward his policy on productivity, prices and incomes.

Mr. W. A. Wilkins: Nobody has worked harder.

Mr. Macleod: That is true. The right hon. Gentleman has been to meeting after meeting and has come away from nearly every one triumphant; in each case with a scrap of paper. [Interruption.] We have seen how effective this policy has been in fact.
Let us start by looking at the figures. In the first quarter of 1965 the average percentage increase represented by wage settlements—and remember, this is since the Declaration of Intent—was 5·9. In the second quarter it was 6·2 per cent., and in the third quarter 6.7 per cent. I am sure that the Chancellor of the Exchequer must sometimes feel like saying, with Pyrrhus, "One more victory like this and we are undone."
While the Chancellor has been working hard during this time, Little Boy Brown has been blowing his horn up and down the country. We have had this long series of agreements which has led, in the end, to an utterly disastrous situation. [Interruption.] It is nice to see the Minister of Technology coming into the Chamber. On 13th December last the First Secretary said:
We are on the brink of a break-through 
Seven months later, on 12th July, he right hon. Gentleman said:
‖ I am convinced that we are on the verge of a major break-through …
Was that the same break-through or were there two different break-throughs? And when he said on 16th December, at the signing ceremony of the Declaration of Intent,
History is being made here today.
—it certainly was.

Mr. Archie Manuel: It was indeed.

Mr. Macleod: I agree with the hon. Gentleman. It was. We now have the biggest gap between productivity and earnings of any time in modern economic history. Certainly history was being made. The index figure of industrial production at 133 for January—revised on the latest figures to, I think, 134; and for December it is down to 131—is certainly history. I can find no period—and I have checked this all the way back, with the possible exception of 1952—when in 13 years there was a year when the gap was so wide between what we should be doing and we were in fact doing.
We now have the worst of both worlds —not just inflation on the one side or stagnation on the other, but both of them together. We have a sort of "stagflation" situation and history in modern terms is indeed being made. There is another point behind the figures. As I say, production has fallen by 1 per cent. or ½per cent. while incomes have gone up, perhaps, by 8 per cent. This can result only in two things happening in the months ahead; either a considerable increase in our import bill to meet the increased consumer expenditure or a very real rise in our prices. But what the First Secretary is trying to do is to conceal the rises that are likely to take place.
London bus and train fares were to rise, so the Government provided a £51½million subsidy, which runs out at the end of the year—but what then? Coal prices were to rise, so the Government gave a £15 million subsidy, which runs out in April—but what then? I ask, because all that is happening is that one is building a dam that is bound to burst in an economy where incomes are swiftly rising while production is completely stagnant.
It was this that led to the Chancellor's famous speech in Scotland at the end of last month. Let me first read to the House what he said, and then what he meant to say. He said:
In spite of injunctions and signatures on the Declaration of Intent, earnings are still going up much faster than productivity. In the first eight months of this year they went up by 8 per cent. and this is bound, unless it is controlled, to result in increases in prices.
Everyone had great difficulty in understanding this particular figure.
I talked to my right hon. and hon. Friends, and we assumed the Chancellor must have some figures of his own and must have known what he was talking about. It turns out that he did not. The most charming account of how this was finally resolved is given in the Financial Timesof 5th November:
It was discreetly admitted in Whitehall last night that Mr. Callaghan's notes for his weekend speech had referred correctly to wage rates and not earnings, and to an annual rate of increase ' rather than an actual increase … Mr. Callaghan, it seems, is not challenging the Press reports of what he said, but it is stressed that he had intended to say something quite different.
I will hand this cutting to the Chancellor in a minute—but I want it back. The

right hon. Gentleman should look into this, because what, in fact, was "discreetly admitted in Whitehall last night" was that "we gave him the right figures —but, of course, the fellow cannot read ". If the Chancellor would now like the quotation, I hand it to him—on the strict understanding that I have it back.
We are told that although there is some conflict between the two right hon. Gentlemen, there is no personal animus. I read this in five newspapers, so it must be right[Interruption.] Well, that is nice, is it not? I will go further and say that I have no personal animus against either right hon. Gentlemen, but what I want to know is which of them is steering this boat, and in which direction is it supposed to be going?
The standard of living is mentioned specifically in our Amendment, and the record over the last 13 years is this. The standard of living—just one figure only—went up—we want to be precise —by 48·74 per cent. in the 13 years of Tory Government. That is defining the standard of living as the rise in personal incomes per head as reduced by the fall in the value of money. That rise is almost identical with the rise in the whole of the previous 50 years under many different Administrations and all three political parties.
We say that this is being imperilled, and I want to start with one particular example. We all talked a great deal at the last election about the "brain drain" about the need of the younger executive, and I am quite certain that all three parties were sincere when we said that this was the sort of man to be encouraged. Let us see what has happened to this man's bills as a result of the year of Socialism we are considering. The figures are given in an excellent article in the Financial Times of 7th May, as the outgoings of a successful executive in his mid-thirties, with a salary of £3,500 a year, a wife and two children.
The ordinary plain calculation alone is that his bills have gone up by £206 in the year. But, of course, that £206 is only part of the amount he has had to pay, because his tax bill has gone up by no less than £52 in the year, coming to a total of £258. Even if he had a rise of £258, he still would not be back where he was a year ago because of the tax element at 6s. 5d. in the £—that is,


standard rate less earned-income relief. This one man, in order to cancel a year of Socialism, would need an increase of no less than £380. That shows what has happened to these people. It shows what has happened in absolute defiance of everything the Socialist Party said to these men at the time of the election.
Let me turn from the particular example I have given, to the general example. What one has to say really needs no embellishment, because the cold list alone is indictment enough. In one year we have increased taxation by £623 million. We have moved into a period of what I call "stagflation". The cost of living has gone up by 5 points in 10 months. We have lost one-third more days in industrial disputes. We have cut the road programme and many other vital investment programmes in the social services. For most of that period, we have seen all forms of national savings doing less well than a year ago. The value of the £ in that period has dropped by a shilling. We have suffered an intense and prolonged credit squeeze. We have a formidable load of debt.
It would be easy to extend the list, but each and every item on it is in direct contradiction to the promises of the Government as a whole, and to the pledges which the Socialist Members gave to their constituents. Such a record demands the censure of the House today and of the country at the General Election.

4.29 p.m.

The First Secretary of State and Secretary of State for Economic Affairs (Mr. George Brown): The kindest thing that one can say of the speech just made by the right hon. Member for Enfield, West (Mr. Iain Macleod) is that it was a bit better than last time. As far as I could discover, where it was not inaccurate it was exaggerated, and where it was neither it was just a tatty going over of the fill-ins we read every week in "Quoodle".
I must say one word of appreciation and kind thanks to the right hon. Gentleman. It is becoming really helpful to us that we can always rely on Opposition spokesmen to bring up the question of the economic and financial inheritance that was ours, and digging out all the

figures again. It saves us doing the work of making sure that that fact stays before the country. I am quite sure that his hon. Friends will agree that the more often they bring that up, the more firmly they plant it, and the less likely they are to explain it away.
The right hon. Gentleman had a little fun about steel. I was not clear whether he was deploring the absence of it from the Queen's Speech, applauding the absence of it, or what the purpose of his comments was. As my right hon. Friend the Prime Minister told the Opposition the other day, if the right interpretation to put upon their solicitous care for steel nationalisation is that they think it wrong that we should not now be doing this, the usual channels can have their conversations about the facilities the Opposition would provide us with to get it through.
I shall be saying a few words in the ordinary course of my speech on the question of investments and incentives. In the same way, I shall deal with the index of production as I come to it in my speech. The old fill-in about the relationships between the D.E.A. and the Treasury and the other economic production departments we have heard so often, but it gets no better and no nearer to the truth.
On the question of the surcharge which the right hon. Gentleman mentioned, may I put this thought to him? If imports had continued to rise at the rate at which they were rising under our predecessors, the gap this year would not be £800 million. It would be £450 million more. Something had to be done about it, as the right hon. Member for Barnet (Mr. Maudling) said in his Budget speech in April of last year, but he then proceeded to waste the next six months doing absolutely nothing about it.
I, like the right hon. Gentleman, will not go again over the whole of the field which we traversed only a fortnight ago. I will start by trying to restate the major objectives of the Government's economic policies. The first one is to get rid of the balance of payments deficit with which the Tories left us. The second one is to achieve a faster annual rate of increase in output as soon as we can, leading to a 25 per cent. increase by 1970 over 1964. The third is to encourage and to bring about a substantial


improvement in industrial and commercial techniques and equipment. The fourth is, by an agreed policy for productivity, prices and incomes—agreed, that is, with industry and those who care about affairs, not agreed with the party opposite—to bring about an early and substantial improvement in Britain's competitive position. The fifth is to correct the gross imbalance which existed when we took over between the regions of the country, both in industrial terms and in social terms. The final one is to change the priorities governing our social expenditure so that the rewards from increased output and earnings are more justly and fairly distributed and used.
Just as we saw in the debate on the National Plan two weeks ago, which hon. and right hon. Members opposite had condemned before they read it but thereafter had, rather humiliatingly, to acquiesce in a Motion welcoming what they condemned, so, it was clear from the right hon. Gentleman's speech today, will the position be on our economic policy in general. They have been too busy, too soon, shouting "Failure" even to note; what the objectives of that policy are. When they finally take them on board, they will be in the same position as they were with the Plan. They will then find that what they have been shouting so loudly is failing will, in fact, be succeeding, and they will again have to welcome what is happening.
It was absolutely fascinating to watch hon. Members opposite today. The only time they cheered up was when they thought that the right hon. Gentleman was applauding some decline in the country's position. At every stage when he was talking about something which might go well they looked as miserable as sin.
I will make a present of this point to the right hon. Gentleman for use, with suitable acknowledgements, in the Spectatorthis week. [HON. MEMBERS: "Oh late."] He can have it for next week. Of course it is not our claim that all our objectives have been successfully completed in the first year. For what it is worth, that point can be had. But they will not all be total failures at the end of 13 years. By its very nature, a programme of that size, apart from having to clear up so much mess at the beginning— (HON. MEMBERS:" Oh."] The right hon. Gentleman took 35 minutes explaining all

this. I have made only one reference to it. Apart from that, such an exercise is a long-term and continuing one. Some of the objectives will be harder to achieve than others.
I will come to the one which the right hon. Gentleman thinks is so difficult. He is quite right. It is difficult and is not made any easier by the challenges made by hon. Members opposite to managements and to workpeople not to cooperate. Some of the objectives will be harder to achieve than others. Action which is required to achieve some of them will have a deleterious effect on some of the others. It is true that having to take action on the balance of payments has a consequential effect on the objective of getting faster and larger growth.
Quite apart from that and quite apart from the inherited difficulties, the need to lay the plans to achieve these objectives, to forge the new policies to carry them out, and to create the machinery to carry them out, all in this year was bound to make this a very difficult year indeed. It is always harder to reverse things and to get started in a new direction than it is to maintain momentum once started. Against that background, let us examine the objectives and see how much justification there is for the charge of failure. Let us see which ones we are progressing with more swiftly than the others. Let us see what substance there was in the general political speech made by the right hon. Gentleman. What justification was there for it?
On the question of the balance of payments, we all know—even the right hon. Gentleman could not dispute it—the dramatic change which has been achieved in this year. I thought that one of the most fascinating operations I have ever listened to was when the right hon. Gentleman did not dispute that it had happened, but every reason why we had achieved a reduction in the balance of payments deficit was either a bad reason or one we could not help or one that did not count.
The point is that, unlike the Tories, we have brought about a very substantial reduction in the balance of payments deficit. If hon. Members opposite are not pleased about it, the country outside is, and nobody more than the business community. It is not simply the reduction


which we have achieved that is the outstanding thing. I believe that the outstanding thing is that 1965, in relation to the balance of payments, has been a year of steady progress towards getting out of the red, whereas 1964 was a year of rapid deterioration right the way through.
As the right hon. Gentleman quite fairly said, we have had this considerable reduction and improvement, not only in global terms overall. The right hon. Gentleman was kind enough to say that we have had it both on capital and on current account. We are very grateful to the right hon. Gentleman for drawing attention to that. Again, I was not clear whether the right hon. Gentleman thought that it was a good thing or a bad thing that we have achieved a reduction on capital account. It is time that one Front Bench spokesman for the Opposition, at any rate, got it into the others' heads that there are times when the country can afford to do things in terms of overseas expenditure and investment. There are other times when other priorities force the Government to hold their hand on that for a bit. It is very much because the Tories would not face that last year that the position snowballed as much as it did.
After what the right hon. Gentleman said, I am not clear whether they are glad that there has been a reduction or whether they claim that not enough has happened. I think that the right hon. Gentleman who will be winding up the debate tonight, and who was having a little trouble with his facial expressions during that part of his right hon. Friend's speech, might tell us whether he is glad and whether he thinks that we should have done more. If it is the latter, it is very odd when one considers the record of hon. Members opposite when they were in office and how they have criticised everything that we have achieved. They pretended that they could spend more and cut taxes, but references to extravagant pre-election promises came oddly indeed from the right hon. Member for Enfield, West. We did our best, but we never came within streets of them and when I saw the papers which they left behind and I found how they were kidding themselves I was surprised that they were as honest as they were.
Just as in the field of Government expenditure they pretended that they could spend more and still cut taxes—and they go on with this piece of duplicity—so in the field of the balance of payments, to judge from what the right hon. Gentleman said, they consider that in their case they could have cut the deficit quicker while doing less about it. That was no more practical than the other proposals which they made.
Within the various constrictions placed upon us by our international obligations —and when the right hon. Gentleman was telling us about the interesting exercise on which his hon. Friend the Member for Worcester (Mr- Peter Walker) and others are engaged I do not know whether he was keeping in mind what was practical and could be policed—we have adopted measures which have been designed to make the maximum impact on the balance of payments with the least threat of damage to the prospects of growth. In particular, we have taken a number of measures to deal directly with the balance of payments.
First, there is the export rebate. It may be that the right hon. Gentleman was not sure what Donald Stokes said, but I think he will find that he is much more representative of those who have engaged in this business than the rather grudging remarks made by the right hon. Gentleman. The rebate has had a considerable impact both on our competitiveness and our ability to get on with the job, and it is showing a surprising degree of success in a short space of time.
We also had the temporary surcharge on imports. As the right hon. Gentleman well knows, there were other possible ways. The Leader of the Opposition left quite a well-documented exercise behind him. Whichever course we took was going to be very hurtful to those whose imports we were going to keep out and, although if we had used some other method the importers would not have had the surcharge, they would not have thrown their hats in the air with joy if we had used a different and more autocratic form of machinery to achieve a different result.
When the party opposite went out of office we had to do something in this field, and whatever we did was bound to be difficult to accept because it had to reduce imports. The party opposite shied off


making a choice every time. We made the choice. It is open for hon. and right hon. Members opposite to say that if they had stayed in office they would have come out of their coma and they would have made a choice and it would have been different from ours. That is a legitimate point of view, but they should now tell us which choice they would have made and how they would have reduced the deficit since they could not have gone on in the way in which they had been going on in the last nine months of office.
We also introduced tighter exchange control. The introduction of the Corporation Tax has had effects on private investment overseas. Restraints on Government expenditure overseas have been considerable. All these have been ways in which we have operated directly to get the maximum effect in the shortest time on the balance of payments situation while having the minimum impact on our need for growth here at home. We went further than hon. Members opposite were ever prepared to go to achieve this result, while they attack us both for taking these measures and for the impact of the measures on our home economy. It is no use right hon. Members opposite muttering about it. There were disagreeable consequences, but we had to take disagreeable measures in part to deal with a highly disagreeable situation which had been brought about by their unwillingness to take action.
It is quite clear that if they had had to tackle this problem this year and had rejected all these measures and had relied on their traditional weapons, the amount of deflation and the consequent loss of output and high unemployment which would have followed would have been far more than anything that the country would have dreamed of during the year when we have been in office. These would have been very substantial, and when the muttering has to stop and more audible comments have to be made from the Front Bench opposite I hope that the right hon. Member for Barnet will give an estimate of what would have been the situation if they had tried to meet it with the old measures of deflation, mass unemployment and general shut-down.
Considerable progress has been made in improving the balance of payments. The trade deficit in the first ten months

of this year has averaged £25 million a month, compared with £46 million a month in the corresponding period of the right hon. Gentleman's last year in office. The right hon. Gentleman sought to explain that away. It was apparently all due to a sleight of hand about values. The answer is that it is not. Exports in this period were 6½ per cent. higher in value. The right hon. Gentleman mentioned this but, since it might have spoilt the gloom into which he was determined to sink, he did not say that they were about 4 per cent. higher in volume than they were in the same period of last year. If a right hon. Gentleman opposite thinks that that is good, as well he might, he might notice that both the outriders outflanking him shake their heads and say, "What a pity ".
On the other hand, the value of imports has been less than 1 per cent. higher than for the same period last year, and the volume over 3 per cent. lower. I have already given the right hon. Gentleman my estimate of what that import bill would have been had we carried on with no weapons other than those which the party opposite were using last year. Therefore, with this reduction in imports and increase in exports we have avoided what otherwise would have been a vastly accelerating trend. Hon. Members opposite seek to explain away this increase in exports and decrease in imports, but they show that industry is making a very encouraging response to the various measures which we have taken to enable it to do so and that industry feels very differently about this compared with the attitude adopted by the party opposite.

Mr. John Bitten: In order that we may fully understand the position, will the right hon. Gentleman give us the figures, based on the latest Board of Trade publication, of net new export orders for the engineering industry, and tell us how these figures for the past five months compare with the corresponding five months of the preceding year?

Mr. Brown: That is the very same point that the right hon. Gentleman made. I did not interrupt him, and interruptions about it now only lengthen my speech. The figures will be readily available. I did not know that the hon. Gentleman would ask me for them or I should have brought them with me. If he will put


down a Question, I will give him the answer.
I turn now to output and the rate of growth at home. Clearly—I make a present of this point to the Opposition, for what it is worth; they can nag about it for as long as they like—the steps we have taken to deal with the balance of payments deficit have affected the rate of growth and have affected output here at home. The two Budgets and the July measures have had their part to play in this. Our justification is that we could not have done the one without incurring the risk, or, if one likes, the actuality, of the other. But let us not exaggerate the situation as the right hon. Gentleman did today.
There are several indicators here. They are all in official publications and I shall not bore the House by going through them. Right hon. Gentlemen opposite can look them up for themselves. One indicator is the continuing level of fixed investment, and another is the clear way in which most of British industry is maintaining its investment programmes ahead. No one would do that if the economy and industry were in the state which the right hon. Gentleman tried to show in his speech.
Second, there is the index of industrial production, to which the right hon. Gentleman referred. As far as he went, he was right: the figure for September, published today, is one point down. But the right hon. Gentleman knows that there always are fluctuations month by month. No one bases decisions or assessments on any particular month's figures. If the right hon. Gentleman had gone a little further in his researches, he would have seen what the comparison was with the period when he and his right hon. Friends left office. In the third quarter of last year, the last one for which they were responsible, the index of industrial production was 128. The graph in "Economic Trends", produced by their own statisticians when they were responsible, shows that not only was it at 128 in the third quarter of last year but it had been practically stagnant during all the nine months before that.
What has been the situation since? In the fourth quarter, which, I suppose, we can nominally claim credit for though it must reflect a good deal that had gone

before, production went from 128 to 130. It has gone up steadily this year, with the single exception of the second quarter when, obviously, some of the measures we took were having their effect. But, with the exception of the second quarter, the index has stood at 132. It was 132 in the first quarter and it was 132 again in the third. So that we are, in fact, 2½per cent. up on the last quarter for which right hon. Gentlemen opposite were responsible, and all the so-called stagnation this year for which the Chancellor is supposed to be responsible has meant that we have had no reduction at all. True the expansion was checked in the second quarter, but it has been resumed in the third quarter. There has only been one quarter's check, not a nine months' check such as it had under the previous Government last year.

Mr. Anthony Barber: What was the figure for January and what was the figure for September?

Mr. Brown: The right hon. Gentleman said that we had published a corrected figure. I do not know about that. The figure I have for January is 133 and for September 131. In between, it has fluctuated from month to month, but it is the quarterly figures that are significant. The right hon. Member for Barnet can explain to his right hon. Friends how important it is in this connection to look at a period longer than one month by itself. For the first quarter of the year, the index of production was 132. It fell to 131 in the second quarter, but it is back to 132 now and, clearly, as the investment and other indicators show, the expansion has been resumed.

Mr. Iain Macleod: Purely to clarify this point, will the right hon. Gentleman agree that the figures for the first nine months last year started at 126 and climbed to 128, and they have this year dropped from 134 to 131? That is the comparison.

Mr. Brown: No. These constant interruptions only serve to lengthen the time which one must take. I did not interrupt the right hon. Gentleman on a single point although there was much in his speech that I should like to have clarified. However, I am glad he has clarified this. His figures are totally wrong. In the first quarter of 1964, when


they were responsible, the figure was 126·7, for the second quarter it was 127·5, and for the third quarter it was 127·9. That is a rise of 1 per cent. in nine months. Now, after a year in which we are supposed to have done so much to damp down the economy, we are ½per cent. up on the position where they left it. I am very glad to have the point clarified in that way.
There are other indicators. Despite some reports which we hear, the demand for labour in general remains high. The October count was 317,000 unemployed in Great Britain, or 1·4 per cent. of total employees. It is very hard to make that match the canvas which the right hon. Gentleman tried to paint today. It is the lowest figure for October in seven years, and I do not think that there will be a major change in the position during the current month of November. The level of unfilled vacancies was correspondingly higher than for many months past.
It is absurd for right hon. Gentlemen to talk as though the Government's measures are having a catastrophic or even a seriously depressing effect on the economy. Whatever effect they have, they are not doing that. Moreover—this cannot be said too often—not only is the charge of failure unreal in national terms, as any of the indicators will show, but it is plainly unreal when one looks at the country through regional eyes. In order to avoid hurting investment projects or the development of regions with unemployed resources, the Government's measures this year have all been highly selective both in their impact on different parts of the country and as between projects of differing degrees of importance.
The six months' moratorium—I want to make this clear again because the right hon. Gentleman once more got it wrong— on starting new projects in the public sector specifically excluded the programme for housing, for schools and for hospitals, and the need to obtain building licences for private projects costing more than £100,000 will not apply to housing or to industrial building. In addition, neither of these restraints will apply at all to projects in development districts and areas which have experienced high unemployment.
By cutting out some of the less essential demands on the building industry, we are, far from depressing the economy, making it possible for more essential projects to be completed more quickly. The restraints on commercial projects in certain parts of the country, together with the controls on office building in London and Birmingham, will not hinder progress but will help to encourage commercial development of this kind in those areas which at the moment have no worthwhile commercial development at all.
As a result of this policy, the less prosperous regions have not been affected as they used to be by the unselective measures which the Opposition always adopted to deal with a situation similar to the one we inherited. Seasonal movements apart, unemployment has not risen significantly in any of those places. As regards skilled labour, there are substantial shortages now in those regions where there used to be considerable over-supply and migration away by people of this very kind. Even in Scotland and other regions where relatively high unemployment has been the order of the day, the shortages of skilled labour are becoming a matter of very great concern.
Business confidence in the less prosperous regions remains high. This does not fit the pattern which the right hon. Gentleman tried to show. It is reflected in a high level of new orders for industrial construction in those regions and also in the increased level of approvals for industrial development certificates in those regions. The latest figures for industrial development certificates approved show that Scotland, Wales, the North-Western and Northern Regions account for a substantially higher proportion of the total certificates approved than they did before. In the second and third quarters of this year these four regions accounted for 52 per cent. of the total projects approved.
This means that we are beginning to overcome the regional imbalance. It means that even in a period of restriction, expansion can go ahead where the labour and materials are available without affecting those regions which are heavily overstrained. This is what right hon. Gentlemen opposite must try to get into their heads. People outside the House know what is happening. Hon. Members opposite may be able to kid people here


but they cannot kid people outside the House who see the effects of this policy in new factories and in jobs. The main burden in postponement of starts resulting from the July measures relating to public expenditure has fallen outside the development districts, and this has no doubt contributed to the maintenance of demand and employment in those districts. Let us consider housing and, again, the same four regions. They have increased their share of starts to 33 per cent. compared with a figure of well under 30 per cent. for the same period in 1961.
Many things remain to be done in industrial and regional development. The Liberal Party in its Amendment refers to the need for more incentives, and the right hon. Gentleman also referred to this need. I am talking about incentives for investment and not incentives for export. I want to repeat what I have said both about industrial investment incentives and about regional development incentives. The existing system of investment allowances was first introduced over 10 years ago by our predecessors; it was suspended for a time in 1956 and the rates of the allowances have been varied from time to time. There have been suggestions from various quarters that for one reason or another this system is not operating as effectively as it should in relation to the considerable sums of money which are involved.
Last Session we carried through sweeping changes in the tax code, and, as the Chancellor explained in his Budget statement, we felt that it was time for a thoroughgoing review of the whole system of investment allowances. We are conducting that review now and are looking at the whole pattern of incentives, both national and regional, to see whether there is a better way of doing things. For obvious reasons I can go no further than that today and until the exercise has been completed and various other consultations and inquiries have taken place. But the exercise is being conducted, and I recognise its importance.
What is clearly essential is to drive on, both with the work which the E.D.C.'s are doing on industrial efficiency and modernisation and with regional development policy so that the country as a whole is fully engaged and the overstrained

areas are eased. Here we have—and we did not have them a year ago—the regional economic bodies, which are beginning to make an impact. No one should underrate the impact which they are having. I hope soon to announce the new East Anglian and South-East Councils. To the right hon. Gentleman this is failure or defeat. I repeat, that is not the view held by people outside the House, nor is it the view of The Timesas we saw from the second leader in The Timesyesterday which was headed," What Manchester thinks today …" They show how well this is working and how completely different it looks to informed and rational men outside the House from the way in which it looks to frightened and irrational men inside it.
Let me turn to the other half of the official Opposition Amendment, about which the right hon. Gentleman smacked his lips with such relish today—the question of productivity, prices and incomes policy. First let me put the question, this time to the right hon. Member for Barnet, which I put to the right hon. Member for Enfield, West the other day. I have so far had no answer. Do they believe that we should have a prices and incomes policy and that it should be an agreed and effective policy? Do they believe that or do they not? Do they believe that we can have such a policy or do they not? The Government not only believe that we can have it but are working hard to get it. Indeed, the right hon. Gentleman's complaint was that we were working too hard, not that we were not trying to get it. Do they believe that we should? Do they think that the exercise is possible or do they not?
We ought to know what is the view of the would-be alternative Government. Or do they believe, as frankly I think they do—and here the right hon. Member for Wolverhampton, South-West (Mr. Powell) has been much more open about their thinking than has the right hon. Member for Enfield, West—that this can be achieved only by the old, anarchic and I think cruel and unfair alternative of sporadic mass deflation and unemployment, reinforced every time that it does not work by even more unfair pay pauses operating on people in the public sector and on others who can least well defend themselves?
It is anybody's guess, but I am pretty sure that the nation as a whole is anxious for our policy to succeed. But let us be clear and let the nation be clear: there is a long way to go yet before we have the degree of success which we need. That may make the right hon. Gentleman smile. But in my view it only reinforces the importance of getting on with the job. There are many people outside who want the policy to succeed but who have still to recognise—and I put it frankly to them —that they are themselves the people who are holding it back. There are too many who think that it is a matter for the other chap.
But, having said that, let us get some things into perspective. Again there were exaggerations and inaccuracies written into the right hon. Gentleman's speech. It is less than a year since there was even the first glimmer of an intention, with which we so irritated the right hon. Gentleman by succeeding when all before us had failed. It is less than a year. We did not have an agreement on machinery with which to operate it, or criteria by which the machinery should operate, until April of this year. That is less than seven months back. We did not set up the Board until the very end of April. Clearly it could not start to work until well into May. What was happening before that could not possibly have been affected by what the policy was supposed to be doing. We have had the policy and the machinery to make it effective and the criteria on which to base it only since some period in May, and we are now only at the middle of November.
Right hon. Gentlemen opposite also forget the number of claims which were already in the pipeline when we came into office. What happened in the first six months of this year was very largely the result of what had been happening in the six months before we came into power. That was inevitable. I have the figures. At the beginning of this year the Government knew of agreements for pay increases or hours reductions or both in the course of 1965 for nearly seven million manual workers, or 55 per cent. of the total of all manual workers in sectors employing 10,000 or more, and for well over 1 million non-manual workers. They were covered by agreements made in the Conservative Party's term of office and which came

into operation in this year There was nothing that we could do about that.
The alleged high rate of increase for a large part of this year—certainly the first six months—was due to operative dates for agreement on pay rates and on reduction of hours; although the operative dates were agreed in the time of the Conservative Party, the dates themselves were in 1965. If we add those 8 million people covered by agreements to the millions of others—I gave the figure to the House some time ago; I believe it was about 4 million or 5 million—whose claims were already in the pipeline before the policy ever got started, we shall see what an inaccurate and exaggerated picture the right hon. Gentleman is painting.
Not surprisingly, if a movement of that order is already on, other workers feel that they have a right to an increase in any case, even though they support the policy for prices and incomes. They say, "There must be a catching up period, otherwise we shall be behind when the new policy starts." The motive for this was quite natural—it was catching up other people who had benefited under agreements which had already been made. This has had an effect on the periods between settlements and the size of the increase which those settlements reflected in hourly wages.
The Government have made it clear to management and unions that this rate of increase in negotiated settlements is much too high. But it does not mean that the policy failed before it started. It means, now that the policy is going, that these rates of increase are rates which we cannot support under the new policy. It is to the credit of management and unions, both the F.B.I. and the T.U.C., that they are co-operating with us to bring this about.
The right hon. Gentleman had a good deal to say about prices. The position on prices is better than at any time during the year for which we have been responsible and a good deal better than in the years before that. There has been hardly any increase at all in the average level of retail prices for some months. There is evidence that many firms are reluctant to risk the scrutiny of the N.B.P.I. which may follow if they put up their prices, and the early warning system, in which they


are co-operating with us—even though the Conservative Party are not—will enhance this deterrent effect and will ensure that we have much more adequate information and can take action about price rises which are proposed.
Despite all that the right hon. Gentleman said about the rise in wage rate settlements and the reductions in hours, I would emphasise that we have held the price level. The Conservative Party did not hold the price level even when the wage level was being held. We have held the price level despite all that they have said about increased earnings. Something must have been absorbed somewhere in higher productivity, reduced profit margins or reduced selling prices to bring that result about.
I hope that right hon. Gentlemen opposite will get into their heads the major reason why they so signally failed in all their attempts—although from what the right hon. Gentleman said today we might imagine that there had been no attempts. The reason why the right hon. Gentleman did not have success with his attempt and why others before him did not succeed is that they kept on doing what he did today—talk about incomes but mean only wages and salaries. They did not accept that this incomes policy must apply to all incomes. This is what brought about their downfall, and it is one of the reasons why I hope to succeed.

Mr. Reginald Maudling: Nonsense.

Mr. Brown: The right hon. Gentleman does not make it nonsense merely by saying so. We shall listen to the right hon. Gentleman with interest.

Mr. Maudling: If the right hon. Gentleman will be kind enough to read what has been said by Mr. Harold Macmillan and successive Chancellors of the Exchequer he will discover that what he is saying is absolute nonsense.

Mr. Brown: I have a feeling that if I read anything by any Conservative leader I shall read some nonsense. Let the right hon. Gentleman ask the leaders of the two sides of industry why these policies broke down before. We know. Some of us were there. We are making some progress, even though we have a

lot more to do. But we shall not get more done if we keep going round and telling people either that they should not do this, as the right hon. Member for Wolverhampton, South-West tells them, or that they cannot do it. This is why the Conservative Party should make up their minds and come into line with industry so that we may say that we shall try to make the policy succeed. They might try to help it to succeed.
There are many different ways of comparing wages and salaries and of comparing earnings. This is one of the reasons why we have such a multiplicity of different figures which are exceedingly difficult to follow. From the point of view of the prices and incomes policy, it is the rate of increase in earnings per head which matters most.
We have not a single or simple comprehensive up-to-date index of earnings per head. It was not part of the apparatus of information bequeathed to us. This and many other gaps in our apparatus of statistical information will have to be filled soon if we are to do the job properly. But taking all available statistics into account, it seems to us that the weekly earnings per head have been rising on average this year at an annual rate of 7 per cent. as against the rise in productivity.
That is insupportable—there is no question of that. But from the start we all knew that 1965 would be a difficult year. There was already the heavy pressure which built up before we took office. The demand for labour was high and we preferred to keep it high. The movement towards a 40-hour week was well under way. All these factors were bound to make 1965 a difficult year.
But clearly the prices and incomes policy is now having an impact. There is an increasing recognition of the importance of productivity in the whole operation. The word "break-through "does not seem to appeal to the Opposition, but we have nevertheless seen some break-throughs this year in the abandonment of traditional demarcation disputes in shipyards on the Clyde and the Tyne and in the electricity supply industry, the petroleum industry and a number of other industries where collective bargaining has brought agreement on greater flexibility of labour. We are trying to encourage and hasten the process by


taking direct action ourselves—following up the Devlin Report, for instance, by the introduction of the liner trains and by our meetings with the car industry. Through the "little Neddies" we are trying to bring it about by gaining the co-operation and understanding of both sides of industry.
I know that many of my hon. Friends are concerned about the question of dividends. In July, I said that the rate of increase of dividends in the first quarter of the year was excessive and that I was keeping a careful watch on the position. The increase in the quarter was 28 per cent. There were, however, some special factors and that is why I decided not to take further action then. In the second quarter there was a very considerable fall-back in the rate of dividends. They were increasing at the rate of only 3 per cent. compared with the situation of a year before.
I put this out so that everyone on both sides of the House and on both sides of industry will recognise that this is not a matter of wages and salaries alone, much less of salaries for teachers and dockers and nurses. It is -a matter for all incomes. I repeat my pledge that we will take fiscal action if the dividend area proves to be unaffected by the general policy.
The National Economic Development Council will be having its general review of trends and movements in prices and incomes soon and that will give us an opportunity in an independent atmosphere to appraise the situation. I think that there should be a smaller growth of income in the year ahead, because of the lower pressure of demand, because the pressure for the 40-hour week is coming to an end, because the "catching up" movement will be losing momentum and because the prices and incomes policy is having a greater impact. We are determined that it shall be applied much more vigorously and with greater urgency. Hence our proposal on 2nd September to put the Prices and Incomes Board on to a statutory basis with power to call witnesses to give evidence and to seek statutory powers to enable us, if we need to or wish to, to introduce—after coming back to this House, of course—a compulsory early warning system for pay and prices.
Against that background we have agreed with both sides of industry on a voluntary early warning system which we are starting to operate. I want to emphasise, so that any fears on this score can be laid at rest—they are unjustified —that the statutory system would only be put into effect with the approval of the House and if the voluntary arrangements should prove ineffective. Even then, it would be done only after the fullest consultation with the T.U.C. and the C.B.I. We want to make it effective and I am convinced that they do. If we can do so there will be no need for statutory backing but there will have to be a very widespread will to make it successful in the time scale we want.
Whatever the Opposition feel about it we, in co-operation with both sides of industry, will do our darnedest to make it work. We are further along the road than anyone with experience—and some of us have had a long experience in these matters and know a great deal about the snags and about the traditions we are disturbing and the delicate mechanisms that have been built up—could reasonably have expected a year ago.

Mr. Frank Tomney: The rate of dividend my right hon. Friend has in mind seems to work out at an average of about 16 per cent. This appears to be about twice any dividend that the United States gets for its overseas investors. Is it intended to hold the figure at that level in view of the 7 per cent. my right hon. Friend quoted for wages and salaries?

Mr. Brown: I am not sure that I recognise the figure of 16 per cent. as arising from what I have been saying. Perhaps my hon. Friend and I can discuss this later.
It is our intention to make sure that this policy shall have an impact on dividends and every other form of personal income as well as wages and salaries. We believe that this must be pressed on because it is a critical key to the whole drive for productivity, for price competitiveness abroad, for curbing inflation at home, and for getting a real rise in our real standard of living.
So long as the Opposition go round denigrating it, then so long must it be clear that they have not grasped the critical nature of this key to the very things


that they say they would want to do. Any fool can show that this is a difficult operation. One does not need to be a Member of Parliament to be as foolish as that. Any idiot can just sit around and giggle at the struggle. But this is work for real people who are willing to have a go—and they are not lacking, despite the carping criticisms from the benches opposite.
Who, a year ago, would have believed that today the T.U.C. would not only be scrutinising pay claims for which its individual units have some responsibility but would also be operating on them? No one a year ago would have believed that this would happen. Who, a year ago, would have thought that the C.B.I. —not even born then—would within a year be co-operating in an early warning system for prices of its thousands of members?
I cannot pay too high a tribute to the vision of the leaders of both sides of industry, men of all political persuasions and none, for their participation in this great tripartite adventure. I can understand those who say that it cannot be done, or that we cannot do it in this way. But I have nothing but contempt for the idiots and gigglers and sneerers in a matter where real men are trying to achieve such an objective.
We would never have been where we are now had industry—including supporters of the party opposite—been confined by the blinkers through which the Opposition squint at this policy. The Opposition's censure move last night was a flop. This one must be rated a fiasco.

5.10 p.m.

Sir Douglas Glover: If the Censure debate yesterday was a flop, the right hon. Gentleman's speech today makes it certain that he will not go down in history as "Capability Brown". It was a poor speech and the first part was much worse than the last.
I know how very sincere and how determined he is in the views he holds and about the things he is trying to do. I admire him for it. But I wish he would get out of his mind the idea that any criticism is unjustified and unfair. I say this because these are the problems that, quite rightly, the nation should debate both inside and outside Parliament, but

the right hon. Gentleman speaks with a "holier than thou" voice as though any word of criticism of anything he says must be wrong.

Mr. George Brown: The hon. Gentleman knows that that is not so. In my closing words I said that I welcomed those who said that our prices and incomes policy could not be done or could not be done in the way we are trying to carry it out but that I have contempt for the idiots, gigglers and sneerers who do not even criticise and do nothing to help.

Sir D. Glover: The right hon. Gentleman must put a brake on himself. He used to have a certain sense of humour. Now it has gone. This is not what the House likes. It does not like being lectured. Even in bitter debate we have some fun across the Floor of the House and I have seen Members of the Government laugh at something cynical said on this side. The right hon. Gentleman should not take it so much to heart.
I want to deal first with the question of stable prices. I would like to know how the right hon. Gentleman reconciles the fact that the cost-of-living index shows a rise of 5 per cent. with his claim that we have stable prices. My right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) showed from the Financial Times the increased cost of living for a person with £3,500 a year. But do not let us forget that such a person is not the only one affected. It goes right down to every family. It has been estimated that it means something like £1 a week for every family of a couple with one child.

Mr. Albert Murray: This is from the Tory Central Office.

Sir D. Glover: No, it is not.

Mr. Murray: Mr. Murray rose—

Sir D. Glover: No. I cannot give way now.
I want now to deal with the so called crisis which is said to have bedevilled the Government's actions from the time they took office. It is rather like smashing the teapot and expecting the housewife to praise what one has done. The crisis that the right hon. Gentleman talked about was created by the Government. The more time passes and the


more reports we get from O.E.C.D. and other organisations, the more it becomes clear that the policy pursued by my right hon. Friend the Member for Barnet (Mr. Maudling) was right. What did he say all through 1964? He made no bones about the fact that we were going to run into a balance of payments problem. My right hon. Friend said that we should be under severe pressure. He said that our reserves were sufficient to weather the storm and the right hon. Member for Huyton (Mr. Harold Wilson), who is now the Prime Minister, agreed with and supported him.
As time has gone on, most of my right hon. Friend's forecasts have been borne out. Exports this year are up by 5½ per cent. In 1964, my right hon. Friend said that exports in 1965 would rise considerably. Right hon. Gentlemen opposite cannot take all the credit for this export rise because they know, as well as I do, that the great bulk of exports, because of the way industry and commerce work, were booked last year. The bulk of the orders now being exported were booked when the Conservatives were in power.
The right hon. Gentleman was not prepared to give the figures to my hon. Friend the Member for Oswestry (Mr. Biffen). However, my hon. Friend has them and in the last five months engineering export orders have dropped by 7 per cent. compared with last year. The improvement in the figures this year is the result of Conservative policy last year and has nothing to do with what the Government are now doing. If the orders for engineering goods now being booked are down by 7 per cent., next year there will be a drop in engineering exports, unless the Government are very careful.
Every hon. Member knows that in the cut and thrust of party strife, which is so much the democratic process, one gets blamed for what the other party has done and takes the credit for what the other party has done—because of the leads and lags. In the export total of £4,500 million, orders for ships and locomotives and aero engines and aeroplanes, probably worth about £1,000 million, will have been booked not last year or even the year before, but in 1961 and 1962. They take all that time to flow through the pipeline.
When the Conservative Party was in power and various financial crises

occurred from time to time, I was never certain when supporting the Government whether, because of the leads and lags, we should not have been reinflating when we were deflating and deflating when we were reinflating. We were often doing things at the wrong time because of the leads and lags, because we were only dealing with what had passed, not realising that the course of events had changed. The situation was sometimes made worse when the economy was squeezed when it should have been boosted.
As a result of our experience, all of us from 1945—and let us include all parties in this—have learned a great deal about running the economy. Let us face the fact that for many years this country's economy will be on a knife edge. However successful we are, we shall never be able not to need to worry about what is going on overseas and what our export performance is. We shall always be balanced on a knife edge.
What I blame the present Government for more than anything else is that deep down right hon. Gentlemen opposite even now have not learned the lesson that confidence is the most delicate flower ever to be grown in any industrial horticultural garden. Anybody who has been in business or commerce knows that a whisper can alter the atmosphere which sweeps across a country. If for some reason people suddenly say, "It is too good ", or a rumour spreads and people do not place orders, contraction sets in.
The Government cannot get away from the fact, whether it was lack of experience—and I will give them credit for that, because right hon. Gentlemen opposite have been out of power for 13 years and there were very few of them left who had experience of administration—

Mr. Callaghan: indicated dissent.

Sir D. Glover: The First Secretary and the Prime Minister had experience and the Chancellor of the Exchequer had a limited amount of experience, but the number of right hon. Gentlemen opposite with that experience could be counted on the fingers of one hand. With that and the crush of the General Election— for during a General Election we say bitter and unwise things about our opponents from time to time and the mood still existed when right hon. Gentlemen


opposite formed a Government—two-thirds to three-quarters of the financial problems with which we were faced were created by the Government themselves. They would not have existed without Government action. My right hon. Friend the Member for Barnet forecast what would happen to the economy and in broad outline events have proved him right.

Mr. Tomney: He did not check it, did he?

Sir D. Glover: How could he check it? He had to wait for time to make it fact. However, in the following 12 months all the export performance and the reduction in the adverse trade balance which he forecast took place.

Mr. Callaghan: Is the hon. Gentleman saying that if his party had won the election, right hon. Gentlemen opposite would not have taken steps to correct the deficit in the balance of payments but would have allowed the situation to continue?

Sir D. Glover: I am going a long way to saying it.

Mr. Callaghan: In that case, thank God they lost.

Sir D. Glover: It is all right to talk about taking steps, but what steps did the right hon. Gentleman, take with the exception of the import charge which has had a very small effect on imports because of stockpiling and so on? What single action has he taken which has reduced the balance of payments? Will he tell me?

Mr. Callaghan: Certainly. There is the import charge, which is worth at least upwards of £200 million in the balance of payments. There is the capital account reduction, which is certainly worth upwards of £150 million in a full year. There is the export rebate, which has certainly helped exports. There are all the additional credits which have been put at the disposal of exports. If the hon. Gentleman is not careful, this will be not an interruption but a speech, because there is so much to tell him about what we have done.

Sir D. Glover: I am grateful for that intervention. The Chancellor said that in his Budget he introduced capital control, which I welcome. Does he suggest that that will save £100 million this year? I doubt whether it will save £5 million. I will willingly give way to the right hon Gentleman again.

Mr. Callaghan: From what I gather, the House is not particularly keen on my prolonging the hon. Gentleman's speech.

Sir D. Glover: I agree that the measures of our capital investment overseas will bite at some time and reduce our deficit, but is the right hon. Gentleman saying that they have done so now? Of course not. They have been in operation only for three months and these things do not work as quickly as all that. The balance of payments deficit was about to come down before any of these measures were taken. The Government themselves said that the balance of payments deficit would be halved in 1965 and it is working out that way.
When he was Chancellor of the Exchequer and after the election, my right hon. Friend the Member for Barnet said that there was a problem. Of course I am not saying that we would not have taken any action. What I am saying is that the enormous measures which the Chancellor had to take were largely a result of the atmosphere which he and his right hon. Friends created in November and December, followed by hasty action and ill-thought-out measures which made the problem even worse. As a result of that, he has had to go on right through this year. I was delighted in July when he got further support from the banks and I hope and believe that as a result of that further support —and this is where I return to the issue of confidence—our reserves will be increased by between £400 million and £500 million by the end of February or March.
When one gets a return of confidence, an assurance that in the near future there is going to be no devaluation, we will automatically, as the leads and the lags work out, get back nearly half of all that we have lost. I am delighted that this should happen, but I think that we


should realise that it is jolly nearly automatic. When there is a fear of devaluation the leads and the lags work very much against the balance of payments, but as soon as the position is stabilised there is an automatic flow back into the country. When my right hon. and learned Friend the Member for Wirral (Mr. Selwyn Lloyd) was Chancellor of the Exchequer, he paid off all our borrowings in 12 months. Once confidence was re-established, the money flowed back again because it is needed in a great trading community such as ours is.
I do not think that the National Plan ought to be called a plan at all. It is a forecast. I do not blame the First Secretary for producing only a forecast—it is a very difficult thing indeed to produce a plan intended to work for five years ahead. A great deal of the plan is based on entirely false premises. Many of the figures were produced by saying, "If we increase our productivity by 25 per cent. by 1970 what is the output in a certain industry expected to be? "That is a very different thing to saying "What is your forecast for the output of your industry "and finding out whether that forecast adds up to 25 per cent.
Industry is trying to build into its forecast the proposition put to it by the Government as a result of the studies made by the Chancellor this year. Is this figure still the target for 1970, when we have this drop in production which means that we have to increase it to 26½ per cent.? Are we still going to increase by 25 per cent. by 1970? Is this a phased programme like the road programme? Is it going to be stretched, to take longer to achieve this figure, or are we still working on this target? It is an extraordinary plan. I thought that a plan was meant to produce a coherency—a matching of one's resources, manpower, wealth and technology, used to the maximum in order to produce the maximum wealth and benefit for the nation.
After having been examined and worked on by a great number of people the plan emerges with 200,000 men short. I am tempted to say that I am very glad that the First Secretary is producing this plan, and not building the Forth Bridge, because it would look a pretty funny bridge if, at the end of the day he was 200 ft. short of the other side.

Surely any plan should result in two and two equalling four. All that this plan works out is that our guesses have turned out wrongly, and that we have to find 200,000 men from somewhere else. The plan talks of the saving in manpower, but with all that saving, we still expect to be 200,000 men short. I hope, for the sake of the right hon. Gentleman and of the country, that we do not find that we are short. I hope that the growth of technology in five years will achieve the 25 per cent. increase without the additional manpower.
There are one or two points I would like to make which I think may help. I would like the Chancellor to have another look at the whole system of P.A.Y.E. I am sure that he must realise that one of the greatest disincentives to increased effort is the amount of money taken out of a person's pay packet, or his monthly or quarterly cheque. If a chap thinks that he is earning £20 a week and he only gets £18, he stops thinking that he is earning £20 and thinks that he is only earning £18. One of the great disadvantages of P.A.Y.E. is that if a person works overtime he is then presumed to be earning what he has earned in overtime for 52 weeks of the year, and he pays a large amount of increased tax. Before the war we paid our tax one year in arrear. Could the Chancellor have a look at the possibility of our paying one year in arrears again and therefore paying exactly the same amount each week throughout the year? If we can get back to that system we would find that it was a greater incentive to increased effort than the present system.

Mr. Joel Barnett (Heywood and Roy-ton): Mr. Joel Barnett (Heywood and Roy-ton) rose—

Sir D. Glover: I will not give way at the moment.
The reason that it would be so much of an incentive is that people do not work overtime 52 weeks of the year. The First Secretary has talked about the 40-hour week and we all know that although the official working week has gone down to 40 hours, people are still working to within 1 per cent., 47·6 hours a week, as they were doing 15 or 20 years ago. But they do not do seven hours overtime every week throughout the year. They work a lot of overtime for perhaps three or four months


then go down to a standard wage for a while and then up again. The system I propose would be a far greater incentive to people to put in the extra effort for which we are asking.
For many years our arguments have been on the question of increasing exports, to increase the standard of living of the British people. We already export 15½ per cent. of the gross national product. No other nation with the exception of West Germany exports a greater proportion of the gross national product. Japan, America and France are all less. It is going to be pretty hard to increase our exports every year, except as the growth of world trade increases, if we want anything like a slightly bigger slice than we now have, of 15½ per cent.
This is where I part company with a great deal of what the Chancellor has done. I know that for temporary reasons he might have felt justified in hitting at overseas investments. But in the world as it is developing, I am sure that the long-term advantage to this country would be very much greater if we could build up our overseas investment from £11,000 million to £20,000 million. [Interruption.] Exactly, but the attitude which is creeping in with all the developing countries, namely, that they want the assembly factories there otherwise we cannot send the basic parts, will increase more keenly every year. Therefore, it is very important and almost essential, that increased investment flows overseas, otherwise these countries will not allow us to send our goods to their markets. We must encourage overseas investment.
Secondly, if the export position is, inevitably, not to get any easier, would it not be money very well spent if we spent more on encouraging the tourist industry, which is one of the unrequited exports, which costs us very little in overseas currency, except for advertising, and which does not place an additional strain on the resources we have in this country? Perhaps the Chancellor of the Exchequer could get the Minister of Public Building and Works, who is responsible for ancient monuments, to go into this matter.
I was horrified to find last year when I went to see Hadrian's Wall that it was almost impossible to look at it without going for a half-mile tramp. There were

about three car parks over the whole length of the wall, and there was nowhere to get a cup of tea. This is one of the biggest draws for Americans. The biggest attraction after the Great Wall of China is Hadrian's Wall. Many Americans would visit it if it were made easier to do so. The tourist industry, which does not involve the transit of goods over frontiers, is one of the things which we have to consider more seriously if we are to achieve the increased standard of living that we want.
We are living in an ever-increasingly competitive world in which more and more nations are industrialising and therefore are demanding that their products should be bought in their country rather than in ours. This means that overseas investment must have priority. Indirect exports are just as valuable, if not more valuable, than sending goods across frontiers. I hope that the Chancellor of the Exchequer will consider these matters because I am sure that they are part of the problem which we in this country have to solve.

5.53 p.m.

Mr. A. E. P. Duffy: I have been in the House long enough to know that the hon. Member for Ormskirk (Sir D. Glover) likes nothing better than a bout of in-fighting in the Chamber. But he has a very generous side to his nature. Therefore, I thought that his description of the speech of my right hon. Friend the First Secretary of State as a poor one was entirely out of character.
I enjoyed listening to the speech of the right hon. Member for Enfield, West (Mr. Iain Macleod). It was a good speech, and certainly a distinct improvement on the speech which he made a fortnight ago in the debate on the National Plan. The right hon. Gentleman was perfectly right to dwell on what I regard as the weaker, more disturbing aspects of the present behaviour of our economy, the changing character of our terms of trade and the widening gap between earnings and productivity. Although he may not have satisfied the hon. Member for Ormskirk, my right hon. Friend the First Secretary of State replied at length. His was altogether a much more substantial speech, and I am taking nothing away from the speech of the right hon. Member for Enfield, West. My right hon. Friend


made a very well-structured speech and I am sorry that the hon. Gentleman, although he did not pay tribute to it— we can hardly expect that from him—did not at least do a little more justice to it. I thought that the hon. Gentleman, like the right hon. Member for Enfield, West, was concerned, perhaps more than anything else, to acquit his party of responsibility for the crisis of confidence a year ago.

Sir D. Glover: Then the hon. Gentleman does admit that it was a crisis of confidence?

Mr. Duffy: Yes, indeed. One can hardly say otherwise in view of the great efforts which my right hon. Friend the Chancellor of the Exchequer has had to make this year to try to overcome that crisis of confidence.
It is important that we should briefly review some of the key economic indicators not touched on in the debate so that we can assess the Opposition's performance during the last, say, 10 years. I want primarily to contrast the position of a year ago, on the eve of the election, with the present position so as to bring out the corrective actions demanded by that crisis—a balance of payments crisis as well as a confidence crisis—which the Government inherited or which was certainly in existence, whether or not it was coincidental with our coming to power. I want to consider how far they have been, first, implemented by the Government, and, secondly, related to the Government's long-term objectives.
I want to do that against the background of a remarkable speech by my right hon. Friend the Prime Minister in New York on 14th April to which many Americans referred while I was touring the United States only recently for seven weeks, when I had the fortune and pleasure to meet many American businessmen, economists and journalists. They were almost at one in their admiration of what they had seen of the Prime Minister, not only on 14th May, but subsequently. They have since by Telstar seen him meet the Press. His speech in Wall Street in April stuck in their minds, and I want to refer to it later because it will help me in dealing with the Liberal Party's Amendment to the Gracious Speech and to make some sort of

appraisal of the Government's programme, its objectives and its chances of success.
The right hon. Member for Enfield, West was right to emphasise the way in which, while his party was in office, the living standards of the people increased. He said that they had gone up by 49 per cent. over the last 13 years. Even if he had not mentioned that figure, I was ready to say that the gross domestic product per head of population has increased over the last 10 years by about 25 per cent., which was sufficient to double the G.D.P. over a comparatively short period of 30 years, which is a good performance by any standard. Of course, no one can deny that because it is so obviously reflected in the average consumption level in this country.
But what the right hon. Member for Enfield, West did not say in order to give a balanced picture was that the retail price level in the same period went up 36 per cent.

Mr. Peter Walker: My right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) also gave the adjusted figure after taking into account the rise which had taken place in the retail price index. The 49 per cent. figure is a real figure.

Mr. Duffy: Yes, that is so. I was going on to make that point. Nevertheless, the significance of this continued rise in the price level over the period for other reasons, which I need not go into because of what my right hon. Friend is trying to do through the National Board for Prices and Incomes, cannot be overlooked. These increased resources were used by the Opposition when they were in government to raise the rate of fixed capital formation in the economy. The cumulative effect of 10 years of investment is a rise in capital stock by about one-third. Despite this, home costs per unit of output have risen by 37 per cent., which shows that we have not been getting the full benefit of this investment and the right level of productivity during those years which the Opposition properly remind us now we are not achieving.
The volume of exports of goods and services increased faster than the G.D.P. for which the Oppposition can take credit —37 per cent. as against 33 per cent.


on the other hand, Britain's share of world's exports of manufactures over this period fell from 20 to 13·7 per cent. The amount of imports which these exports would buy rose by 48 per cent. with the aid of improved terms of trade. It might also have been said, by way of balancing the picture, that the volume of imports has grown faster than the purchasing power of exports—56 per cent. as against 48 per cent. and much faster than the G.D.P., namely, 33 per cent.
I think it is not surprising, in view of this, that the balance of payments on current account at the end of this period, though favourable for most years, gave us only an aggregate of £389 million by way of surplus, and this, as we know, was achieved only at the cost of exchange control, at the cost of "stop" policies, at the cost of a certain amount of growth. Moreover, the reserves of gold and convertible currencies were consistently lower in relation to our short-term liabilities and we had at the end of the period a net deficiency of nearly £600 million.
I am not saying that at the end of this period, about which the right hon. Gentleman was talking with such pride an hour ago, there were not achievements, substantial achievements, to the credit of his party, but the fact that a man has added to his net assets during a period does not mean he had not some difficulty in living within his income during that period, and that pretty well sums up, I think, the record of the Opposition over the last decade.
If we now come to the position at the eve of the election we find that the cumulative current account was just in balance, but it was making no contribution—and this is something of which the hon. Member for Ormskirk needs to be reminded— to the financing of long-term capital exports which were averaging then about £175 million a year, and, indeed, had done for some years. The reason why this current account was only just in balance was that our export performance was not satisfactory. It was not satisfactory when we recall the comparative cost position of this country at the time, and when we recall the difficulties of other countries in Western Europe on account of the scarcity of labour. It was not satisfactory, either, when we remember that the exports of manufactured goods, which make up the

bulk of United Kingdom exports, were rising less than those of other industrial countries taken as a whole. It was not satisfactory, also, of course, when we remember that our gold and foreign currency reserves were under £1,000 million for the previous seven years. It certainly was not satisfactory when we also recall that the United Kingdom, the United States apart, was the only industrial country not to increase its reserves during that period.
I wonder, therefore, how the right hon. Member for Enfield, West could possibly have said during his speech And so we came to the election of 1964 without any crisis of confidence." Of course, there was a latent crisis of confidence. We felt it all that year. We all knew that corrective measures were not being taken sooner. No one was in any doubt at all that there was a need for corrective measures and that the delay in taking them, as we all know, was due to the need for careful election timing.

Sir D. Glover: Sir D. Glover rose—

Mr. Duffy: I ought not to give way because I want to sit down within 20 minutes if I can.
My right hon. Friend the Secretary of State for Economic Affairs described 1964 as a year of rapid deterioration throughout, and I do not see how we can possibly get away from that in view of what I have just said. I have been at pains to come up with an objective picture. I have not been selective in my indicators. These are key ones. No doubt following speakers —and as far as I can judge there are Members who are very well qualified to do so—can come up with more significant indicators—if there are any—if they catch the eye of the Chair. But in view of all this, I think my right hon. Friend was perfectly entitled to ask that during the speech of the right hon. Member for Barnet (Mr. Maudling), who will wind up the debate for the Opposition, he will say what he and what his party would have done had they won the election.
Now, to come up to date and compare the position I have just described a year ago with the position today, and we look at the reserves, balance of payments, exports, investment, savings. I shall not go over the ground already covered, but it is important to stress a marked improvement in the reserves this year.
When we look at the balance of payments we note a marked improvement in the second quarter. We have these figures, and I shall not delay the House or take up time by detailing them. As to exports, I am not giving figures which the hon. Member for Ormskirk has rightly given, but I will give figures which have not been given. During the period August to October this year exports were nearly 10 per cent. higher than a year ago, while imports were precisely the same. I am not going to say that we shall keep that up. I hope we shall. Happily, the trend is significantly upwards. But it is nevertheless a most striking improvement.
When we look at investment, and particularly at what the Prime Minister said in his speech on the National Plan a fortnight ago, we see fixed investment by manufacturing industry in the first six months; of this year compared with the second half of 1964 is 7 per cent. up, and he gave us the optimistic picture for 1965 as well as 1966 so far as one can determine the intentions of manufacturers according to Board of Trade returns.
That again is most heartening, and yet the Opposition Amendment, as my right hon. Friend reminded us, refers to the failure of the Government's economic policies. I do not see how Members opposite can possibly sustain that indictment during the rest of this debate.
I was worried, I must confess, in recent weeks, about local savings, not merely for the short-term position but also the long-term position. I was worried about the implications of the National Plan for savings and investments and how it would be possible to get the requisite levels of both to give us our targets by 1970. However, I was considerably heartened at the weekend by a reply to a Written Question to my right hon. Friend the Chancellor of the Exchequer, on the basis of the seasonally adjusted figures, that personal savings are estimated in the second quarter of this year to have been 9 per cent. of personal disposable income, which compares with 7–6 per cent. in the first quarter of 1965, and the level so far in the first half of this year is clearly above that for 1964 and certainly 1963.
This is most heartening. I do not want to be unfair to some Members opposite. I know they are interested in this, and

there is certainly one of them wanting to catch your eye, Mr. Speaker, and I know he has been even more pessimistic over this than I have been in recent months. I hope that he and some of his hon. Friends will share the joy which we feel about this striking improvement, because we know that without this we cannot possibly sustain not merely the Plan but the present position.
Yet the right hon. Gentleman the Member for Enfield, West in a sense was right. He is usually right most of the time because he is so careful in what he says, but it very often means that he has not given the whole picture. For example, he said that we had seen last year national savings doing less well than a year ago. That was only part of the picture, and I suspect he knew it.
Now what of the future? I think the Secretary of State for Economic Affairs was quite right to dwell upon the need for balance of payments equilibrium and the defence of sterling, because without either we cannot possibly hope to achieve all the wide programme of social reform which makes up the Queen's Speech. I want to touch briefly upon the balance of payments in order to show, as I have said I would like to, what steps I think will be needed and relate them to the Government's economic objectives.
I do not think there is any doubt whatsoever when we look back on the experience of the past that the balance of payments has always tended to be a major constraint on economic growth. On the other hand, many of the difficulties of the past can be attributed to failures of demand management policy. For example, in 1963 the expansion, like the previous upswing in 1959–60, led to crisis. This was undoubtedly due to excessive expansionary measures. I recall that during the Budget of 1963 Members of this House warned the then Chancellor of this.
I think that this is even more significant when I recall that the recent expansion was shorter than the previous upswing. Demand management is clearly of vital importance. But what is crucial is that the persistence of an unsatisfactory underlying balance of payments position, on an average of fair years and bad, points to more deep-seated factors. There is a need, therefore, for planning, for


more skilful management of demand within the economy, and for a tougher competitive climate to help maintain an upward trend of exports.
As for planning, we are going to get this now, as we know from the evidence of recent weeks and which my right hon. Friend repeated only an hour or so ago. It is absolutely imperative to encourage steadier as well as faster growth as part of our long-term strategy.
I think, however, that more skilful demand management is needed to help us pay more attention to the main secondary effects of reflationary policies. If the competitive position of the United Kingdom is to be improved, then a prices and incomes policy is clearly called for. Such a policy is being developed by this Government, though no one can possibly mistake the difficulties in the path of such a policy, especially in a free society.
Productivity is also of importance because, as I have said, and as I think is clear, we have not yet felt the benefits of all the investment already made. Other longer-term reforms of a structural character are highly desirable therefore, and the Government have already some of these in hand. For example, there is a number of measures to improve the quality and flexibility of labour supply, and the little "Neddies" are studying ways of improving the efficiency of firms, and regional development schemes are being brought forward for major areas of the country. In turn, they should facilitate the adoption of a more differentiated approach to the problems of each region than has been the case in the past. In certain basic sectors, particularly rail transport and the docks, the Government have announced rationalisation and modernisation schemes. Legislation on monopolistic and restrictive trading practices is being extended and reinforced.
That does not mean that the Government's goal of reaching a balance of payments equilibrium by the end of 1966 is going to be an easy one. The margin for manoeuvre is limited, and large external obligations have been contracted. Servicing of the debt to the I.M.F. calls for an annual surplus of some £200 million in the years 1967–70. It was really about those external obliga-

tions and our ability to meet these new debts that the Prime Minister spoke in New York on 14th April and American businessmen were heartened by what he said. He described simply how this could be done by a tougher competitive climate. In a most impressive speech he brought together the Government's objectives for a new Britain and a comprehensive picture of a dynamic economy in which good incomes could be fairly earned by hard, intelligent work, or constructive enterprise in a tough, competitive environment, and in which the Government will assist in the process of modernisation, largely by securing a cooperative approach based on planning by consent, but by a readiness to penalise or prevent anti-social practices, and also by a readiness to look after the weaker members of society. In this way he believed—I found American businessmen a good deal more convinced than formerly—that the national output would rise much more rapidly, and that its allocation between people and uses could and would follow a more acceptable set of social priorities.
I wonder, in view of this and in view of the Prime Minister's assurances as well as the content of the Gracious Speech, how the Liberals can possibly have put down their Amendment. I do not doubt that the hon. Member for Caithness and Sutherland (Mr. George Y. Mackie) will try to catch your eye, Mr. Deputy Speaker, but I should like to remind him that I probably represent more Liberals than he does. I know what some of them are thinking about the Queen's Speech. I know from my experience that a surprisingly large number over the past ten days have been heartened by our announced policies. They welcome and accept the contents of the Queen's Speech; like the Liberal candidate for Harrogate who, according to today's Yorkshire Post, has resigned from the Liberal Party and taken steps to join the Labour Party. That was for the reasons I have just given, because he accepts the Queen's Speech.
The fruits of this new Government's conduct of our economy are already evident in the balance of payments position and in the recovered strength of sterling. It is also to the credit of this Government that they have been able to


keep the boom going for so long without having recourse to large-scale unemployment. I do not know that we have managed the trick this time, I do not know that we have established the right Keynesian balance—only time will tell— but I do know that in his management of the economy the Chancellor of the Exchequer has been more successful so far than any of his predecessors. The proof of this can be seen in the prolongation of the present boom.
My right hon. Friend the First Secretary of State and Secretary of State for Economic Affairs was perfectly right to claim credit in his remarks for the way in which his selective policies, notably in the regions, have also helped to keep the boom going. I want to be fair about this. On the evidence and the face of things there is a much more skilful conduct of the economy by the Chancellor and by the First Secretary. I do not see, therefore, how the House can possibly accept these two Amendments.

6.16 p.m.

Mr. John Bitten: Although the debate has ranged over pretty well the full spectrum of economic policy, I wish to try to confine my remarks mainly to one aspect, the incomes policy, not least because it is specifically mentioned in the Amendment moved by my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod).
I invite the House to recall with me 11th February when the First Secretary of State and Secretary of State for Economic Affairs told us that he now had machinery established on which the prices and incomes policy could work. This, in a sense, was an historic occasion. The right hon. Gentleman on that occasion was feeling in a fairly fraternal mood, I think, because I was rash enough to comment that very many people would regard the quest for an incomes policy as illusory and, indeed, undesirable. I also asked about statistical machinery, and I shall come back to that later. On that occasion, we did not have comments about idiots, gigglers or sneerers, but the right hon. Gentleman in a great state of fraternal feeling accused me of courage. Whether it was the courage of the Minister of Technology's convictions, I do not know. I

did not claim that at all. Perhaps I was entitled to say that I was sceptical, and I hope to show that my scepticism has been more than justified.
I ask the House to consider three points which now seem worth considering on the development of the incomes policy. I put them under the headings of confusion, danger, and yet again a concern with the statistical machinery which must touch upon the very practicability of such a policy. I hope to return to the point I made in questions on 11th February, a point which has been made subsequently by a number of my hon. Friends, about the statistical machinery by which we are asked to evaluate whether or not the policy is succeeding and also to determine whether or not the First Secretary and the Chancellor himself can determine whether such a policy is succeeding.
I comment first on the confusion. I think we are seeing a considerable amount of confusion about the incomes policy. As evidence for that, I consider the statement which was issued by the First Secretary's Department on 3rd September. There was then the comment put out by the Department of Economic Affairs that—
There is a general understanding of the need of the situation but it is not being reflected in a satisfactory movement of productivity, prices and incomes. Prices are still rising and pay claims are being settled well above the norm.
Clearly this is a statement which is incontrovertible, but what I find confusing and, I suspect, a great many others find confusing, is that just short of a fortnight later the Department of Economic Affairs with a great flourish produced the National Plan which says, on page 67, on the incomes policy:
An encouraging start has been made." I find it somewhat difficult to reconcile those two statements.
I shall now consider the question of the danger which I believe to be inherent in this policy. I think the danger is that the Government have "gone nap "on an incomes policy. Their whole economic programme to some extent rests on the success of an incomes policy. This is no exaggeration on my part. I think one could find ample quotations to show that the arch stone, as it were, of their economic policy is the success of this venture.
It seems that as the difficulties and, as I believe, the inherent contradictions of such a policy become apparent there will be a growing disposition to cast around to blame others. At the moment the blame to some extent is focused pretty sharply—as it was by the Secretary of State this afternoon—on my hon. and right hon. Friends who are taking a somewhat sceptical attitude towards it, but I think that as time goes by others may find that they are accused of not co-operating in this great venture. I have always distrusted the idea of consensus in politics and consensus in Government. This may be a highly unfashionable thing to say, but I believe that one of the results of this will be increasing concern on the part of the Government that they have been let down by those whom they invited to be their agents, the Confederation of British Industries or the vetting sub-committee of the Trades Union Congress.
If I understood the Secretary of State correctly, he said that these bodies must make the policy effective, when he was referring to the early warning system. That was a clear indication that if they did not make it effective statutory power would be taken. I do not think that an unfair condensation of the remarks he made. I believe there is an inherent slide towards increasing control of prices and incomes. I believe this is a return to the philosophy of the 1945 Labour Government which set great store by these kind of controls. This is no exaggeration; it is there in the Statist article published some months ago when the President of the Board of Trade talked about the Tories dismantling the fine planning machinery left behind by the outgoing Labour Government in 1951. Therefore I do not regard it in any sense as scare politics to talk about the slide towards statutory controls implicit in this incomes policy.
I wish to conform with my intention to be brief, and I will now talk about what seems to be the confidence trick nature of this exercise. I hope that it is understood that I do not use this term in any pejorative sense. There is a degree of nonsense in all our politics. We must acknowledge this to ourselves. There is a degree to which we hope we can sell

things to the people without them necessarily understanding the full implications or extent. I do not want to prate on this particular line. [Laughter.]An hon. Member laughs as if this were something like pas devant les enfants. We may adopt these postures, it seems, but not on the Floor of the House. What I am saying this afternoon is not particularly agreeable. It is perhaps a distinctive view, but I am saying it on the Floor of the House because I believe that it is here that it should be said.
Where the nonsense calls for more than the permissible degree of credibility is in the attempt of the Government to establish that an incomes policy can succeed. As I understand—and I shall be happy to be corrected by the Chancellor on this point—the development of an incomes policy is seen as trying to determine the general level of activity by identifying and then selecting individual components and subsequently controlling them rather than relying on what he would call the old crude overall tools for the management of the economy.
As the Chancellor does not intervene to correct me, I think I may take it that he assumes that to be a fair interpretation of the philosophy behind the policy. The Chancellor has not interrupted me and I move on comforted. Therefore, when I question the statistics of an incomes policy, this is not a sort of esoteric touch or a clever dick kind of intervention. It must touch on the whole feasibility of an incomes policy, because if we are unable to identify as the prerequisite of our measure of selectivity the whole exercise to my mind is severely questioned, to put it no higher. This was the point which prompted me to ask my questions of the First Secretary of State. I am sorry that I am gunning for him when he is not present to take account of this, but the Chancellor will be answering the debate and I hope that he will assure me on these points.
When I asked the First Secretary about the machinery which would be employed for measuring the success of the incomes policy, that was a question which he declined to answer. I make no complaint about that, but I hoped that as time went on we would see developed an answer to the question. The answer has come, not from the First Secretary of State but from the Ministry of Labour in its publication,


the September issue of Statistics of Incomes, Prices, Employment and Production That says:
Information is not generally available about the rates of wages actually paid by employers, commonly called ' market rates', nor of the extent to which these may be different from negotiated or statutory rates." If that is conceded by the Ministry of Labour, it throws very considerable doubt on the whole credibility of this exercise.
I go a stage further. We are all too prone to talk about wages as though wages were the overwhelming component of the wages and salaries section of the gross national product, but that is not so. Wages admittedly account for 60 per cent., but salaries account for 40 per cent. A number of my hon. Friends, the hon. Member for Woking (Mr. Onslow), the hon. Member for Worthing (Mr. Higgins), the hon. Member for Portsmouth, Langstone (Mr. Ian Lloyd) and myself, asked some questions relating to salaries because we felt that salaries must be vital to the credibility of the whole exercise. The Secretary of State on that day was feeling rather less fraternal. It was called a venomous intervention. What did we have against salary earners? This was touchiness against any kind of examination of his policy which augurs ill for those who are the voluntary participants in this exercise. If it goes ill they may get the same rough handling as was meted out to me on one or two occasions, but maybe they are better able to look after themselves.
No Government Department has been able to offer very much in the way of a trend in salaries, and there is no such thing as drift in salaries as in wages. We have only to look at the heavyweight weekend Press to realise that there is a fantastic movement around of young salary workers throughout industry. Therefore, the measure of the drift in salaries is really what is paid to refill a job which has become vacant because someone has moved on to better himself elsewhere.
Though entirely reliant on outside sources for information, it is worth quoting from the Hay-M.S.L. report which appears in the November edition of The Director. From the sampling carried out, of salaries in the range £1,250-£2,000 a year, it was found that the increase had amounted to between 8 per cent. and 9 per cent. over this time last

year. This may be so, and I think that it probably is. But, as far as I can judge from speaking with people in industry, this may not be the whole picture. Are the Government able to confirm this rate of increase? Can they deny it, or is their answer simply, "We do not know "? If it is the latter, then, to put it mildly, this casts considerable doubt on the credibility of this kind of exercise.
In the attitude which I have struck, particularly about the statistics of an incomes policy, it must be made clear that what I have said is not pedantry at all. Indeed, it runs to the very heart of the problem, for a great deal of nonsense is talked these days about this subject—not least by the New Statesman, in which John Morgan wrote on 5th November:
… at the Economic Ministry … the understanding of the movement of wages and prices reaches unparalleled heights of sophistication.
What sophistication? I wrote to the New Statesman, but my letter was not published, and I have heard not a word from Mr. Morgan. Perhaps the Chancellor will tonight tell us whether he agrees that unparalleled heights of sophistication have been reached. If they have, perhaps he will let us know what they are.
Let us return to the significant day in February when the First Secretary made his statement. I admit at once that there has been a lot of history reviewing, which, I have tried not to do. There may be another occasion when I can go into that in greater detail. Suppose that at that stage, in February, we had known that during the following few months retail prices would be rising at an annual rate of 5 per cent. I take that figure from the Government's own statistics. Suppose, too, that we had known that the rate of productivity—such as it may be calculated from the index in the Economist— was rising at a mere 1½ per cent. annual rate, and that the index of industrial production would be lower than it was in February. I suspect that we would all have felt that the incomes policy was not living up to the fairly rich reputation which was being accorded to it.
It is no good the First Secretary saying, "It did not start until May ", because I believe that the whole idea was that the climate should be set for it to come into


being. Certainly that applied to the Budget in April. I recall that a great deal of argument centred around the fact that that Budget was designed to create such a social climate. If we had known or could have been told that in the months to follow—and such figures were available from the Board of Trade—that the volume of net new engineering orders would fall by as much as 7 per cent. over the corresponding period of 1964, we would indeed have been shaken.
When I raise these questions, it is no good the First Secretary trying to fob me off as if I were impertinent to be asking them. It is a reflection on his ineptitude that he did not talk about our balance of payments position and our prospects for next year in terms of the current balance without these figures, particularly since they are available in the Board of Trade Journal.
I do not want to be accused of knocking Britain because I am drawing attention to this volume of figures. Indeed, the value of orders may come out somewhat better. None the less, I imagine that the engineering sphere accounts for about 25 per cent. of our total exports. I do not imagine that this sort of thing is susceptible to a precise definition, although the Chancellor may wish to correct me. Nevertheless, this must have implications on our current trade balance for next year.
What I now have to say may be considered controversial, although I make no apology for saying it. When one looks at the economic indicators it must be through a glass darkly—and I speak as an economist. There is far too great a disposition these days to give to economic forecasters or preachers a kind of astrological importance. Let us, therefore, be modest in our forecasting.
On the existing evidence, I think the economy is still over-heated. I say this in view of the continuing shortage of skilled labour and evidence that the wage drift is continuing. I believe, therefore, that we are confronted with the quite serious possibility of renewed balance of payments difficulties next year on the current trade balance. We must, at the same time, remember that it is on the current trade balance that most overseas attention will be focused. Having said that, I again

reiterate that I hope I will not be accused of knocking Britain in making these comments. The First Secretary appears to be in a fairly robust mood today, so I must make my position clear.
I make these remarks on this occasion in view of four items which appear in the Gracious Speech; legislation on Exchequer subsidies for local authority housing, legislation to lessen injustices in the rating system, measures to provide supplementary National Insurance benefits relating to earnings, and measures concerning the pensions of retired members of the public services. We know that in the latter case there will be a cost of about £25 million a year. I do not wish to argue the merits of these items. There will be other occasions to do that.
Suffice to say at this stage that in every case there will be an addition to consumption, because I think I am correct ing saying that the whole purpose of those four items will be conceived in terms of social legislation to aid those who are more likely to spend the money they get than to put it in the bank. That being so, we are moving to a situation which must result in increased consumption, the full measure of which I do not know, although I would be grateful if the Chancellor would tell me.
I suspect that we need deflationary policies in addition to those announced by the Government. This may sound like harsh reality, but it must be said in a debate of this sort and in the kind of speech I am making. The cost of these pieces of legislation must, I suggest, be matched by increased taxation designed to fall on consumption; and it could well be that additional measures should be under consideration. These things must be said, and it is no good saying them in the smoking room. Perhaps the Chancellor may even get some vicarious benefit from my saying them. I would rather these points were made here than elsewhere. Government measures must measure up to the reality of the situation, and while, as I say, it may sound like harsh reality, I prefer it to the fiction of an incomes policy and the fiction of a National Plan.

Mr. Callaghan: Would the hon. Gentleman conclude what I think is a realistic and logical analysis of the situation by telling us whether he thinks


we should pursue the incomes policy? If so, how does he consider that we should strengthen it? If he thinks that we should abandon it because it will not work, what does he suggest we put in its place?

Mr. Bitten: I think that it should be abandoned, and I have never tried to disguise that belief. I believe that the alternative is much stricter overall control—if one likes, a reversion to the system operated, or the system that was sought to be operated, by my right hon. Friend the Member for Monmouth (Mr. Thorneycroft) before he resigned. I have never hidden my identification with that view.
If it will give the Chancellor any encouragement, when my right hon. Friend the Member for Wolverhampton, South-West (Mr. Powell), speaking of the incomes policy, said that it was a nonsense, a transparent nonsense and a dangerous nonsense, I would only conclude that, on the evidence so far available, the magnitude of that nonsense, its transparency and its danger have become apparent even sooner than someone as sceptical as myself had imagined.

6.40 p.m.

Mr. Leslie Hale: I have always said that I embark on economic seas without much confidence, but I am grateful to the Opposition Front Bench for the framing of this Amendment because they have given me the chance to become more politically conformist by defending the Government on those particular heads on which they are most deserving of support. I have read the Amendment. There is some reference to savings in it, and I can well understand why that subject has now been avoided. One of the other problems of being a Member for a highly sophisticated constituency like Oldham—indeed, the only problem for me—is that a great many of my constituents are much better educated and informed than I am. I should, therefore, like to thank the right hon. Member for Enfield, West (Mr. Iain MacLeod), whose knowledge and experience I usually respect, for ending the debate on a slightly juvenile note, a slightly slap-happy note, because that is more suited to my own particular style and limitations.
When the hon. Member for Oswestry (Mr. Biffen) was speaking I reached the

point where I turned and used the one flattering phrase used in this House, saying, "This chap is talking good sense." I agree with what he said about the economists. I was happy that the right hon. Gentleman mentioned the introduction of economic advisers, on which there is the old precedent of Montagu Norman, not now generally regarded as a very happy one. I was pleased that there were two of them. I should not like to turn to the hackneyed attack on a former Leader of the Opposition and his use of matches to help him on this subject. Why they got rid of him, I do not know —I think he was nobbled in the stable.
I was impressed as anyone who, like myself, can get understanding from a little manual process such as that which I used over geography. I could never remember which side Omsk was from Tomsk. I used to say, "Skegness to the right and Pembroke to the left", and when I looked again it did not seem to be on the left at all. When we had two new economists, I tried to find out which was the rive droiteor gauche of the Danube, and which was Buda and which Pest. My constitutents assured me that the Danube had not had a rive droite for a very long time, just as Threadneedle Street does not have a Left Bank.
I made the suggestion at the time, before the business had developed, that if these two very distinguished gentlemen were to act as economic navigational buoys, they should be lit up, and labelled "larboard "and "starboard", so that one could safely drive an economic course right through the middle without obvious danger. I rather think that my right hon. Friend did that in the end, and he should be congratulated on it.
Some of the arguments put forward today would not do for Oldham, and are rather juvenile for the House of Commons. We have had, in substance, the famous old defence in the divorce case in which counsel said: "The respondent pleads that he has not committed adultery on this or any other occasion. Secondly, if he has committed adultery, which is denied, the respondent committed contributory negligence." I do not want to bring a blush to the cheek of Miss Mary McCarthy—I have to be careful in these censorious days. "Thirdly, if he has committed adultery, which is again


denied, the husband condoned it by his absence at the material time."This has been the case that has been put today, and previously.
I must say that the right hon. Member for Barnet (Mr. Maudling) is a little more honest about it. He said:"The Chancellor has done what I would have done myself." Today we have heard, first, that there never was a crisis. Secondly, we have been told that if there was one, it was not caused by the defendants in the course of their previous government but by what happened in the course of the first week of the Labour Government, by means not specified at all. We have heard, thirdly, that if there was a crisis, which is denied, we pinched our ideas off the right hon. Gentleman, and used precisely the same measures that he would have used. Fourthly, the measures which in his hands would have worked, did not work in the hands of my right hon. Friend. That has been substantially the case put forward in the course of the day.
I did not quite hear something said by the hon. Member for Oswestry but I think that he said something with which I am in complete agreement, though perhaps I misunderstood him. I think that one should say things frankly to the public. I have a great respect for British public opinion. I do not expect all of my constituents to be passionate about the problems of Rhodesia, but I believe in the ultimate judgment of the people, and I believe that in every constituency the political workers have a great wealth of information and talent which could well be appreciated to the advantage of this House. I say that the Chancellor used socially undesirable methods to deal with a terribly dangerous situation; and that he had to use socially undesirable methods because, in the time limit imposed on him, no other methods were available.
One is always tempted to look back to 1931, but that is a long time ago. That was a world in which there was no G.A.T.T., and in which one reads the economic advice given by the Treasury with appreciation of something so extraordinary in the Keynesian era, that one regards it almost as a curiosity. The Chancellor had to take those measures. Nobody who casts his mind back can

fairly say that in the then situation there was any other course to be taken. I fail to see that he could have taken any other steps, although, obviously, the use of Bank Rate is one that one would not have wished.
It is the object of the Labour Party to try to return to a low-interest policy. When the Labour Government in 1951 left an unhappy balance-of-payments situation, the present noble Lord, the Master of Trinity, then Chancellor of the Exchequer, doubled Bank Rate in two short operations in a period of about six months, although he was left with stocks high enough to enable him to take economic measures not available to my right hon. Friend. There is no question that these measures had to be taken in 1965.
The hon. Member for Oswestry again comes up for favourable selection, because he expressed a perfectly fair criticism when he asked: are the Government placing too much hope on the economic plan? Is this really their sole immediate objective of planning? Have they no alternatives possible? If this fails, will there not be a very serious situation? Frankly, I remember many of us talking —and much more distinguished people than I working—on the possibility of a wages and incomes policy, or of a prices and productivity policy, which I think this really is, as I shall explain a little later, and most of us came to the conclusion that, however desirable, it was hopelessly impracticable.
Therefore, when my right hon. Friend embarked upon this policy I viewed it with a certain amount of scepticism. It seemed to me that he was pursuing the unattainable. Although I regard it as a highly reputable political occupation for a Minister to risk his career in the pursuit of what may appear to be unattainable but is obviously desirable, I really cannot think of anyone in the House who would get up now and say, "If this is practicable, if it can be made to work, it is not obviously desirable". Clearly it is in everybody's interests.

Mr. Biffen: I will not make a lengthy intervention. Perhaps the hon. Gentleman and I can discuss this afterwards. There is a perfectly legitimate argument to the effect that this kind of policy is undesirable, that the central allocation


which affects to superimpose the working of market forces is undesirable. However, we can argue this on another occasion."

Mr. Hale: I do not know that I want to argue it on another occasion. I have shown that I listened to the hon. Gentleman with attention. I can understand the argument that the means which may be necessary to enforce such a policy may have some unattractive, and indeed undesirable, features. This is a legitimate argument, but I would have thought it absolute nonsense not to concede at once that, if such a policy can be attained, it is of the utmost value to the community, and probably to this community more than any other in the world because of our dependence upon exports and the desirability of trying to perfect our export position.

Mr. Will Griffiths: I am inclined to agree with my hon. Friend in what he is saying now. Like myself, he was a Member of the House when after the war the Economic Survey used to be published, which most hon. Members awaited with bated breath. It was published showing the out-turn for the past year and forecasts for the forthcoming year, illustrated by little men holding cubes. For. most of us, all our political actions were determined by that Treasury publication. It took many of us some years to realise that each year it was wildly inaccurate and wrong. Therefore, although I agree with my hon. Friend in—

Mr. Speaker: Order. An intervention cannot be a speech. Mr. Hale.

Mr. Will Griffiths: I apologise, Mr. Speaker. May I say that I agree with what my hon. Friend is saying, but he should not underestimate the difficulties?

Mr. Hale: I am obliged to my hon. Friend for telling me that he agrees with what I say and for taking up some of my time to tell me so. We dealt with the problem of the inaccuracy of economists some time ago. Perhaps I could say that we are more or less agreed that quot economines tot sententiae and that they are at their best in expounding the ignorance of other economists. No one has failed to say that. We are expressing just a little doubt that the

means to secure this policy may have a certain amount of political dynamite in it.
I have watched my right hon. Friend the First Secretary of State pursuing this policy. The right hon. Member for Enfield, West spoke very good naturedly on this matter and talked about running here and there—it is not a bad thing to run here and there when one can; I could not do it now—and working very hard and toiling very faithfully in pursuit of this policy, as indeed my right hon. Friend is. I do not believe that there is anyone in the House who does not believe that my right hon. Friend has achieved much more in a limited time than was expected. My right hon. Friend had a wonderful demonstration of support from the trade union movement. He scored an astonishing success against the predictions of all the Press in his handling of the trade union movement. He has got a substantial measure of support.
Let us adopt the method of trying to be honest about this. My right hon. Friend, for obvious reasons, calls this a prices and incomes policy. I call it a prices and productivity policy at the moment. It cannot yet be an incomes policy. Everybody knows that my right hon. Friend cannot persuade doctors to postpone claims for increased salaries merely because he says that he has a policy that he hopes he will be able to put over a little better after a couple of years' hard work. Nobody will postpone their social claims for the moment. The proposition that wages may have risen or that incomes may have risen out of proportion to the figures suggested is not a relevant statement.
The real attack upon right hon. Members opposite, which has been made already, is not only that they did not take steps to remedy the crisis, not only that they postponed dealing with the crisis for electoral reasons, but that for six solid months the country was kept in an electoral uncertainty. I was assured that the election must be in May. I said, "You do not know the Tories. It will not be until the last moment. They will be defeated anyhow and they will hang on in the hope that something will turn up "—the political policy of Mr. Micawber, which has a good deal to be said for it in economics.
Therefore, my right hon. friend has got increased confidence in the country. I do not yet want to see legislation to enforce this. I do not believe that my right hon. Friend does. There may come a point when, if he can develop confidence, he does command so much support from so many sections of the community that it may be necessary to take some steps to deal with those who have not come in and who have made it clear that they are unwilling to do so, provided that that is a reasonably small portion of the community. This is how I see it. I sincerely congratulate my right hon. Friend on the courage and initiative he has shown.
Both my right hon. Friend the First Secretary and my right hon. Friend the Chancellor of the Exchequer have sufficient perspicacity to know that I would not stop at that and that the encomiums may be followed by a few criticisms in detail. Indeed, had there not been the statement today by my right hon. Friend the Minister of Aviation dealing with this morning's article in The Times, one might have had a good deal more to say. I am in the hands of these very able constituents of mine. They ask me a lot of awkward questions. They ask me, "How do you balance your payments by buying foreign aeroplanes? "I have never been able to find the answer. Indeed, I felt that that particular item of policy was the most regrettable of all, from every point of view.
Let me return for a moment to a single general classification. I had intended to say that there are items in the First Secretary's economic plan—clearly it cannot be an economic plan at this stage in detail—which worries many of us on this side. There is the failure to mention any possibility in regard to steel's political future. There is the rather sad general omission of any reference to women. What is to happen about equal pay for equal work? When my lady constituents mention this, I say, with complete sincerity, that in my view my right hon. Friend has got to achieve his prices and productivity policy before it is possible to adumbrate a reasonable hope of a successful incomes policy.
I quote one of my right hon. Friends in his absence who is constantly talking

about our aspirations for a more egalitarian society. There is not much about an approach to an egalitarian society in the plan as adumbrated at the moment. I do not attack it for that, because I say that I do not believe it can be done at the moment. I believe that we must establish the prices and productivity policy first. We must get a maintained financial equilibrium.
I return for a moment to my right hon. Friend the Chancellor of the Exchequer. I have said with complete sincerity that I think that he took the means at his disposal and I think that he saved the £ in the process. It is rather sad to hear hon. Members opposite point out that there was much help from the Bank of England, since I can remember what they said about the nationalisation of the Bank of England and about Labour's policy of placing the Bank at the service of the community. Some of their comments are a little out of place in this regard. Perhaps their memories are shorter than mine.
Having said that, my right hon. Friend must some time face the fact that we cannot go on like this. The Prime Minister, in the course of the election, made rather a lot of play with the "stop and go" joke, which on the whole is one of those things which at the moment does not seem quite so funny as it was. If we are to have a future plan we must deal with the balance of payments problem, as it effects this country probably more than any other nation.
We must try to take measures to isolate ourselves from the sort of operations, whether by the wicked bankers of 1931 or by the intelligent gnomes of Zurich of 1965, which are in essence the buying of currency by those who have most to profit by the devaluation of currency in any part of the world, if they see it coming in time, rather than the normal operations of finance. They may be good business men and good ratepayers but they are a danger to our arrangements and our security.
Their operations, perfectly properly, are conducted in the hope of prosperity and profit, and we are in a situation in which, when virtually there are only two world currencies, the £ and the dollar, their operations must be against either the dollar or the £ at any given


moment. When the Reichsmark was revalued, largely because defence in Germany was being wholly financed by the Tories out of British finances, it was said that dealings in the Reichsmark were beginning to imperil the £, and, even more, there was a rumour that the lira was likely to be revalued, involving even a larger operation which would remove large sums of investment and support from sterling.
I always remember Herbert Morrison saying that the political indicators never pointed in the same direction at one and the same time and that if they ever did we would have reached a position in which we could claim a little certitude. The political indicators have been pointing for a long time in the direction of the need for an international trading currency. I remember saying many years ago that countries should pay for their exports and not their imports, which really is the financial situation which for a long time has been forced over the large surplus trading nations by implication.
The economic plan contains one paragraph with which I do not disagree and it is a serious one for the Prime Minister himself. I worked with him very intimately and closely for some years on the question of war on want and economic aid for the unprosperous countries. We have set up a Ministry of Overseas Development and populate it with economists. Now the economic plan comes out and says that we shall have to consider the whole question of economic aid in view of the balance of payments situation and that we cannot go on like this.
I have always said this. I have always been treated by friends of high ideals and great ethics as something of a reactionary because I have said that we cannot go on without some sort of control. We cannot be issuing surplus money to Angola for aid to be spent in Portugal and unless there is a real hope of international trading which will balance it in the end. There are serious objections to blocked sterling. There are serious objections to political discrimination in handling a policy which should be motivated more by a sense of Christian duty and our belief in the ultimate welfare of man.
There are all these difficulties and I do not believe that some of them can be avoided. There is, for instance, the

making of provision for Ethiopia where poverty is great when personally, on political grounds, I should like to see more given to Tunisia where poverty is also great but where a brilliant and dynamic political ruler has tried to keep himself independent and to keep out of controversies and have the rule of order and decency in North Africa which, God knows, needs preserving and making more effective.
As Andrew Schonfield has been pointing out, the amount of aid in terms of world aid, not in terms of England, is rather less per head for the poorest countries, a little more for the not quite so poor, and still more for the better developed. The poverty of some of the tragically poor countries is imposed by irresponsible dictatorships or rulers who cannot be relied upon to see that the aid ever gets to their people. Nevertheless we must consider this. I hope that there will be no question of diminishing the aid which we give to the peoples of the world. Here again my constituents say, "Look here, Leslie. It is all very well to lecture us pompously about this, but why can you buy military aircraft abroad and you cannot give money for food?" That is a question which I cannot answer. On the face of it, it seems to be a difficult question to answer.
As I have said, the incomes policy is to come. I hope that the First Secretary will continue as he has done. I think that he has done extremely well. I think that he has come measurably nearer the objective, which I did not think that he would reach. If we refrain from factious criticism and offer only helpful comments. I think that he may pull it off, and in the process we shall have done much for savings.
I used frequently to be a trustee for savings. I used to rely upon the bank to advise me and they said, "Put the money in 3½ per cent. War Loan". This was the thing in accordance with the trustee regulations. But what happened to savings in the last 13 years? I never like referring to the last 13 years. It is rather like being a brute to a prisoner after he has served his sentence and come out. Consols ended by standing at 37 instead of 100. They were near to 100 under a Labour Government. I think that they reached 100, and certainly


they were over the 90 mark. What we have been doing economically over the years is swindling people out of their savings. The one reason why we cannot get savings now is that people cannot go on paying for a War Loan Certificate which when they get their money back is of less purchasing power than when they put it in.
British insurance companies have a high international reputation for honesty. It is the politicians who let them down. I started paying an insurance policy in 1926. I used to boast that I had made provision for my old age and I would be able to walk out of here, triumphant and independent without worrying too much whether a Member had a pension. I have been drawing it now in my advanced years. There is no longer adequate provision for old age. It has gone. The rentiers have been swindled by inflation. There may have been a reason to swindle then after the war and say to them, "You cannot retain the value of your assets when people come out of the war disabled for life." There has been no protection for savings, but I believe that my right hon. Friend's policy gives the best hope of all of securing savings.
I recall a conversation with the late Nye Bevan in which he propounded the view that a Labour Government ought, first of all, to protect poor people's savings, to start by saying, for instance, that Post Office Savings would pay interest in the real value of money. He said that if we did that the Chancellor might himself be compelled to produce a policy to preserve the value of money because he would otherwise have to pay out so much.
I have spent all my time in encomiums. I feel that the Chancellor has done well and the First Secretary of State has done well. In my constituency, I constantly hear immense approval of the Prime Minister's labours, largely from people who have never voted Labour. Recently, when I was told by a constituent that the Prime Minister had scarcely put a foot wrong, I replied, rather tartly, that that was probably true but that although he seldom put a foot wrong, whenever he did he trod on me. However, I should add that, whatever may be the economic and political consequences of

the Rhodesian situation, I very much doubt that they will redound to the advantage of the British economy.
I believe that the Prime Minister has ceased to give the appearance of being just an astute politician and has become a statesman. I support everything he has done. He has done magnificently and has given a great lesson to the world in being prepared to accept sacrifice of face in a way that few politicians have ever done. He has said," I shall make every effort I can. I shall satisfy the world that we have made every effort, and then I shall take whatever disagreeable measures are necessary, but no more, and I shall try to deal with the situation with magnanimity ".
I have reservations about what the Government are doing in other spheres, and it would be wrong of me not to say so. One of the Amendments down on the Order Paper today is signed by me. I do not know what happened on the bloody field of Bosworth, but some future historian may tell us that the voice which was heard to call "A helicopter, a helicopter, my Queen's Speech for a helicopter ", was not that of Richard III. Recalling, as I do, the politics and history of the past. I am worried. I do not know why 80 or 90 of my colleagues should gather in the corridor to sign approval of the Prime Minister for saying something in qualified terms that he said in most definite terms a year ago, and, apparently, decide that they would put it down every St. Valentine's Day until he carried it out.
I am reminded of what happened to a friend of mine, an American by birth and the son of one of the most unsuccessful prospectors in the State of Texas. He found himself having to consult a distinguished solicitor who was known as a "wise old bird" in matrimonial cases. His father, as I say, had been unsuccessful. The son was rather a withdrawn person, and, in his youth, he looked rather as though he might end as a member of the C.I.A. Then, on his father's premature death, they struck oil in sinking the grave, and from that time on he never looked back. He qualified as a mortician's cosmetician in the University of Omaha, Pa, and became famous for his introduction of pastel shades. Then he fell in love with an English girl, married and settled down


here, acquiring English domicile for matrimonial purposes, though not for Estate Duty. He found himself in this unhappy plight, which is very similar to my own in politics.
When he broached the word "divorce ", the solicitor was a little taken aback and said, "I thought you were happily married ", to which he replied, "1 am, but it is the ' missus'. She has changed sex ". The wise old bird said that this was most distressing but he had to tell him that he saw therein no cause whatever for divorce. My friend said, "You don't say?—that's a fine thing ", to which the old solicitor replied, "I hardly think so. There must be a matrimonial offence committed by him or her, as the case may be, and I see here no such matrimonial offence ", and he added that it might be a question for moral advice.
As I have said, my friend had acquired English domicile, and he was living here. He had got his grouse moor in Yorkshire, his penthouse in Park Lane, his mistress in Brighton, his yacht at Cowes, a beach in the Bahamas, a villa on the Costa Brava, and, of course, a registered office in Jersey, and settled to the humdrum life of the haute bourgeoisie.The solicitor asked "That is your archiepiscopate?" He replied "Both."The solicitor replied, "Try York," and then as a final word of advice, "Try to be adaptable yourself. Try to be conciliatory. The best thing you can do is to change sex yourself and show yourself adaptable."
I am anxious to be adaptable, and there are certain matters on which I am prepared to be. But on byssinosis, the White Paper on immigration, and the statement on steel, I might have difficulty in falling completely into conformity with the advice which is constantly offered to me.

7.15 p.m.

Mr. John Page: It is always a handicap to follow the hon. Member for Oldham, West (Mr. Hale), the most entertaining speaker in the House, and I hope that he will forgive me if I do not follow him in arbitrage, adultery or changes of various kinds. I hope also that the House will forgive me if I do not continue to follow the pure and, I think, in some speeches today, flashing stream of economic affairs

but turn to the related subject of industrial affairs.
We are today discussing plans and policies to give this country greater economic efficiency and stability. In his speech last Wednesday—I hope that we shall examine it a little more closely today as it was a winding-up speech and this is the first opportunity to do so in the House—the Minister of Labour said that it is
… the problems which arise from restrictive practices and unofficial action that impede the greater productivity that we want."— [OFFICIAL REPORT, 10th November, 1965; Vol. 720, c. 302.]
The Gracious Speech tells us very little about the steps which the Government propose to take to create greater industrial productivity. I welcome their actions in connection with the docks and the new emergency "fire brigade "for the motor industry, but, despite the Prime Minister's assertion that there is an all-out attack on restrictive practices, all the Government seem to have done is set up a couple more committees for the shipbuilding and printing industries.
The Minister of Labour's speech was in marked contrast to that of my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), who spelt out the Conservative Party's policies on industrial relations and its general policy for industry as a whole, industry which, as the hon. Member for Oldham, West said, provides the means whereby we can give people in this country and in other countries a better way of life.
The Minister of Labour took up his usual attitude in debate, which we on this side of the House always regard with affection, of laughing whenever anyone does not agree with him and saying, like a jovial uncle, "They do not know what they are talking about". This is his constant technique, but I think that his devoted nieces and nephews are inclined to think that the old boy is only saying it because he does not know what he ought to do himself.
Much of the right hon. Gentleman's speech last Wednesday was devoted to pouring cold water on one aspect of industrial policy which had been mentioned by my right hon. Friend, that is, our proposal, which we are rather disappointed not to see reproduced in the Gracious Speech, that some legal enforceability should be given to agreements in


industry come to under the negotiating procedure. I was happier earlier this afternoon when there was no lawyer sitting on the Government Front Bench. Now we have a distinguished lawyer present, and I am fishing in deep waters. If he cares to interrupt me I doubt whether I shall be able to give a lawyer's answer to many of the problems which are aroused by enforceability. But as one who has been engaged in manufacturing industries for 20 years, I have some practical knowledge of the subject.
The Minister of Labour considered this single aspect of making procedure agreements legal without considering it in a wider context, but when the Conservative Government are returned to power again a policy will be introduced. First, there will be a new code of industrial behaviour, increased power for a new register of trade unions and a range of industrial courts, which can spring easily from the tribunals which will be or have been set up under the Redundancy Payments Act.
Hon. Members opposite may be inclined to laugh off these policies, but they will find it difficult to do so, particularly the Minister, when they examine the evidence which has been presented to the Royal Commission on Trade Unions by the right hon. Gentleman's own Ministry. That evidence accepts that there is much to be said both for industrial courts and for unions becoming responsible for unofficial action by their members.
Today we have had a new statement on the whole problem by the C.B.I. I will quote one part in which it recommends the setting up of a registrar of trade unions, and presumably of employers' associations, too.It says:
The registrar is not to be an anonymous legal official administering a limited set of regulations but a public figure counselling and prodding unions or employers' organisations into action, including action against breaches of agreement and unofficial strikes, which have turned public opinion against much of the industrial relations system.
I am not with the C.B.I, on this. I see the new registrar as someone with a quasi-judicial position. Although I am a great admirer of Lord Robens, who seems to be the best advocate for the benefits of private enterprise among ex-Labour Cabinet Ministers since Lord Shawcross, I do not agree with the sug-

gestion that he would be the type of man to take on this new job and to become very active in promoting ideas of industrial relations, himself going round to deal with unofficial strikes. The registrar must stand withdrawn from the immediate field of industrial activity.
The second point made by the Minister of Labour was that if negotiating pro cedure were to be made legally enforceable, this would lead automatically to a closed shop throughout industry.I speak personally, but my right hon. Friend the Member for Grantham (Mr. Godber), a former Minister of Labour, and Lord Blakenham have said that they and the Conservative Party have always supported full voluntary trade union membership. If our new policies lead to increased membership of trade unions, provided that it is voluntary, I see no harm in that at all. Part of the object of our industrial policies should be to have strong and responsible trade unions dealing with strong and responsible employers, but always seeing that the individual employee has the protection which our suggested industrial courts would provide for him in any difficulties which he might have either with his trade union of with his employer.
In using the expression "closed shop "the Minister was trying to scare hon. Members and the public away from any legislation about trade unions. I do not believe that he has a case to make in saying that legal enforceability of negotiating procedures would lead to a closed shop. We are not blazing any new trails. Such agreements are legally enforceable in virtually every industrial country in the world, and this has not led to closed shops there. I understand that 16 per cent. of our working population or 3½ million people already work in conditions of a closed shop. I doubt whether that is a larger proportion than in other industrial countries such as the United States, Germany or France.
The right hon. Gentleman's final argument was that legal enforceability of negotiating procedures would not work unless all individuals concerned were union members. I see no logic in this argument, which he put very forcibly. Let us say that there is a shop with 50 per cent. union members and 50 per cent. non-union members. In the event of a breach of negotiating procedure or


an unofficial strike by trade unionists, the union would be legally and financially responsible to a known extent, but it would have no responsibility for the non-unionists employed in that shop. Let us assume that because of good leadership by their trade union representatives, the unionists refuse to go on an unofficial strike, but that the 50 per cent. nonunion members go on strike. The union would have no responsibility, financially or otherwise, for the position of the nonunion members. In the same way, even if the whole shop went on unofficial strike, there would be nothing to state that a union would be responsible in any way for the activities of non-union members who went on unofficial strike.
I do not wish to speak for long. I hope that the bogy raised by the Minister of Labour about a closed shop can now be set aside. There is no foundation for his fears, and the public should not be frightened by them. I believe that the public are longing for legislation and firm action about industrial relations, and particularly about unofficial strikes. Right hon. Gentlemen opposite are unwilling and incapable of producing the answer in this respect, and they will shuffle it off as long as they can. That will be one of the main reasons why after the next election, which I hope will come soon, we shall have another strong Conservative Government dedicated to the kind of reforms which I have mentioned.

7.28 p.m.

Mr. Joel Barnett: The speech of the hon. Member for Harrow, West (Mr. John Page) had one thing in common with all other speeches by hon. Members opposite— they all lacked constructive comment. We had an odd speech from the hon. Member for Ormskirk (Sir D. Glover) in which he seemed to suggest that as a solution to all our problems we should have cups of tea on Hadrian's Wall—apart from another odd suggestion about P.A.Y.E. being paid in respect of the previous year. Equally the right hon. Member for Enfield, West (Mr. Iain Macleod) was wholly lacking in constructive comment, except for one proposal that there should be some personal tax incentives for exporters. He said that this view had been expressed by the hon. Member for Worcester (Mr. Peter Walker) recently, but I hope he will

not mind my saying that I had made similar suggestions in this House, early in the last Session.
There is much in the Gracious Speech which one can welcome, but to achieve what is in it we shall need a sound economy, and therefore we need the National Plan to succeed, although, even if we succeed, the National Plan shows one thing above all else—how little we achieve even if we meet all the targets set out. Then it would be foolish not to be aware that the plan has in it many assumptions. One has only to look at some of them to realise the difficulties.
In the Plan we require exports to grow by 5½ per cent. a year, imports to grow by no more than an average of 5 per cent. a year and a productivity growth rate of 3–8 per cent. We need to redeploy manpower and to increase investment in plant by 7 per cent. a year. We need the success of an incomes policy, to limit the growth of public expenditure to 4¼ per cent. per year and to increase savings. We need more mergers to improve efficiency, and to deal with restrictive practices, and we need more women to be employed in industry and so on. It is very easy to pick holes in all or any of these assumptions. Right hon. Gentlemen opposite have been doing so but with hardly a constructive alternative. The Plan is quite right to set targets and to show the difficulties in the way of reaching those targets. It is easy to be critical, but it is not so easy to find the answer. Unlike most critics I am prepared to confess that I do not know all the answers to the economic problems facing the country.
We have only to listen to some of the criticism which we have heard in the House and elsewhere to know that others do not know all the answers either. We have had criticism of the imports surcharge, but what alternative would the critics suggest? Personally, I should have preferred then, and I would prefer now, the certainty of selective quotas, but would the critics prefer this? We had criticism today of an incomes policy, delivered very effectively, consistently and honestly by the hon. Member for Oswestry (Mr. Biffen). He is always honest with the House, and today he was equally honest and consistent, as is his right hon. Friend the Member for Wolverhampton,


South-West (Mr. Powell). But he had only one alternative to offer to the House and that was to revert to the 1957 policy of his right hon. Friend the Member for Monmouth (Mr. Thorneycroft). This he has told us clearly today and on other occasions.
I ask those who are worried about the effects of the incomes policy what alternative they want? Do they want the old-fashioned deflation of Conservative Chancellors? Or do they want the type of economy which we had even earlier? We have also had Opposition criticism of the Corporation Tax, in particular its effect on overseas investment. But if we do not take this sort of action at a time when we are, as it were, investing overseas on hire purchase, what should we do? The right hon. Member for Enfield, West, at the Conservative Party conference said that a Conservative Government would change this aspect of the tax. In other words, they would delete the help we are getting in our balance of payments by this tax. There is criticism also of export incentives but the critics must be aware of the difficulties before any Government in this matter because of international obligations.
But perhaps the most irresponsible criticism of all is by those who bemoan the insufficiency of expenditure on the social services. The hon. Member for Oswestry was at least honest. He suggested four items of the Queen's Speech that he would not have included. He did suggest ways in which to reduce Government expenditure, although I would not agree with him.
The most peculiar criticism is that made by the right hon. Member for Enfield, West. On the one hand he said, rightly, that industrialists were told to assume a growth rate of 25 per cent. but he doubted whether they themselves would have forecast such a rate. Then he ridiculed the figure as being worse than stagnation when compared with the 25–3 per cent. in what he described as a comparable period. Such cynicism is no substitute for constructive criticism, and that is all we have had from him and other right hon. and hon. Gentlemen opposite. How would he deal with this aspect of our economic problems? Would he leave the targets at the levels that industrialists feel they can achieve?
Perhaps even worse than the irresponsibility of the Front Bench opposite is that of back benchers opposite. I have been particularly disappointed by some of them in their speeches on the National Plan. They should know better than to follow their leaders in destructive criticism of that sort. I think in this connection of the hon. Member for Horsham (Mr. Hordern) in particular. He said we were experiencing the most stringent credit squeeze in living memory. Perhaps some people have longer living memories but I cannot accept his statement.
Of course it is true that we have a credit squeeze and I accept that it has not worked, at least in the sense that there is still great pressure on resources. But I do not go along with the disappointment he expressed at the low level of unemployment. He went on to say—and I am not prepared now to argue the rights or wrongs of it—that production is static. The point was argued earlier today. I accept that it is static this year. No one would dispute it. But I was sorry to see the happy, smiling faces of hon. Members opposite when told today that production was static.
A most disturbing fact is that, despite all we are doing, productivity is static this year. I have never accepted the logic of the need for a pool of unemployment to deal with that situation. It is an odd way to increase production and bridge a manpower gap. In effect, we are told we should bridge the manpower gap by having less people employed. The hon. Member for Horsham had only one practical suggestion. He said that we should reduce the growth rate to match the number of workers available. But surely it is right to set a target and then strive to achieve it, difficult though it may be.
In fairness to the Opposition, one must admit that they have put forward one positive solution. They talk of personal incentives, and talk of it as though this would be a magical solution. The Liberal Party, in its own Amendment, uses the word "incentives ". Never have I heard, in this House or anywhere else, a serious analysis of whether personal tax incentives really can do the job. Because I believe we should try to give some direct incentives by way of direct taxation, I think such an analysis to be worthy of careful consideration. But I do not


believe that we should exaggerate the value of incentives, nor should we shirk the fact that we must decide how to balance the books if we are prepared to give these incentives.
There are only two ways of doing it at present. The first is by cutting Government expenditure and the other is by increasing some other forms of taxation. Nigel Lawson, who will shortly succeed the right hon. Member for Enfield, West at The Spectator, wrote an interesting article in the Financial Times recently in which lie discussed this aspect of Conservative policy and considered whether it could be done by cuts in Government expenditure or by increasing other forms of taxation.
Personally, I would opt for cuts in Government expenditure but not in the social services. I would save about £500 million a year by cutting defence expenditure and commitments in the area east of Suez. But I must admit that I have my own difficulties in my party in achieving this, policy just as the right hon. Member for Wolverhampton, South-West has in the Conservative Party. For my part, I shall go on trying to persuade my party that what I and some of my colleagues are saying is right, and I hope that the right hon. Gentleman will do likewise—although I am becoming a little disillusioned about that.
In the short term, the only way of making these cuts in direct taxation is by an increase in some other forms of taxation. One must accept the logic of that and be prepared to make such a redistribution. I am prepared for it but one must ask to whom these personal tax incentives should be given.
We could give them to those earning £10,000-plus a year, as was suggested in an article by Mr. Vince in the Sunday Times in August. Or they could be given to what have been called the "pacemakers" —presumably those on £2,000 to £10,000 a year. Or we could give these incentives to all taxpayers.
Of course, it would cost little to give this to the £10,000-plus taxpayers but it would antagonise all those who would not be getting such an incentive. People I speak to, earning £10,000-plus, of course complain bitterly about their tax liabilities, but it would be a gross slander to suggest that they would work harder or

longer if we gave them an extra few hundreds a year in tax relief. Some might play a little less golf, but I doubt it. A really successful man or a man of real worth has never been stopped in his tracks by the level of taxation. What applies to the £10,000-plus a year man applies even more so to the "pacemakers ", although they too complain about the level of taxation.

Mr. George Y. Mackie: Does not the hon. Gentleman think that the man with £10,000-plus a year might be pushed a little harder by the man coming from below if such incentives were offered?

Mr. Barnett: I do not quite follow the hon. Gentleman. I did not suggest that the £10,000-plus a year man might not be pushed by people below. I am considering whether tax incentives would push him. I gather that the Liberal Party considers that a direct tax incentive will push such a man. Perhaps the hon. Gentleman would do me the courtesy of following my argument.
I have not met many young men and women of worth in the "pacemaker" section who would work harder or longer for the sake of an extra few pounds or even a larger amount by way of tax incentive. I think that to suggest that they would is getting close to an insult to our young executives.
Then there is the suggestion that we should give the incentives to all. Anyone with experience of industry knows that there are men and women, particularly women, who work perhaps from 10 a.m. to 3 p.m. or only three or four days a week, saying that they do so because of the high levels of taxation. Old-age pensioners tell us that one of their reasons for not working longer is high taxation. Yet in the latter case I elicited recently, by a question to the Chancellor of the Exchequer, the information that it would cost only £7 million if we were to exempt from taxation National Insurance retirement pensioners earning up to £10 a week inclusive of pension.
The National Plan talks about activity rates as a method of bridging the manpower gap. We could make a contribution if not to making people work harder then at least to encouraging a certain


number to put in extra hours, which would go a certain way towards bridging the gap. One must recognise that cuts in direct taxation, however, can only be comparatively modest and such an incentive would not be an incentive in the real sense of the word as one understands it because a man would not be paying less as he earned more. Because of the system of reduced rates of personal taxation less is paid lower down the scale and higher rates the more one earns. I am not sure that one would wish to change that system even if one could.
It would be dishonest to suggest that cuts in taxation could be substantial and I hope that hon. Members opposite will not try to suggest to the public that such cuts could be substantial in the immediate future. It is vital to understand that the importance may lie not so much in the amount—for example, a married pensioner earning £10 a week at present has only 5s. deducted under P.A.Y.E., although this is not, of course, insignificant to a pensioner—but in the psychological effect, which might be great. While direct cuts in taxation cannot be other than small, they might help to solve some of our problems. Of course, it cannot be the answer to all our problems. These can be solved only by Government action to turn the assumptions of the National Plan into reality.
I therefore welcome the National Plan in the sense that it shows that the Government are aware of the difficulties and are trying to do something about them. While tax incentives are not themselves the whole answer, they can make an important psychological contribution, and I hope that the Government will consider carefully selective cuts in direct taxation as one method of helping to bridge the manpower gap.

7.50 p.m.

Mr. Donald Box: The hon. Member for Heywood and Royton (Mr. Barnett) brings to the House an expert knowledge through his occupation as a professional accountant. I must say that it is rather more pleasant to listen to him at a reasonable hour after memories of his speaking in the early hours during the Committee debates on the Finance Bill. Later, I shall have something to say about accountancy and I hope

that if he disagrees with me then, he will take an opportunity to raise the matter.
I note that the Government's first aim mentioned in the Gracious Speech is that we should develop a soundly-based economy. That is a sentiment with which most of us would agree. I cannot help feeling that had we had a Conservative Administration in this past 12 months or so we might have written "maintain and develop a sound economy ", for as time goes on it becomes more and more evident that the economy was basically sound when it was handed over to right hon. and hon. Gentlemen opposite.
In support of this I remind hon. Members of the speech of the hon. Member for Colne Valley (Mr. Duffy), who told us at great length how pleased he was with the reception which the Prime Minister received when making his speech to the Wall Street bankers on 14th April. Hon. Members opposite cannot have it both ways. The Prime Minister boasted on that occasion of the strength of sterling in April and, of course, that strength existed last autumn as well.
There is no need for me to repeat the wearisome details of how half the £750 million deficit on capital and current account was largely accounted for by the fact that we were helping under-developed countries and placing investment abroad which in due course would yield handsome returns by way of dividends. The position was further aggravated, of course, by stockpiling by industrialists in this country in anticipation of the return of a Labour Government and, in consequence, a return of control.
But today even the most gullible of the electorate—and I am referring to that section of the electorate which votes Labour, nationally or locally—despite the protestations of their leaders, are beginning to understand that the basic position was sound. Possibly in support of that they are recalling the fact that in a White Paper on 26th October last year the Government made the forecast that even if there were no basic change in policy, there would be a considerable improvement during 1965. Despite this, some right hon. and hon. Gentlemen opposite will persist in spreading false accusations about this deficit. They do so on the basis that if enough mud is


thrown, some of it will stick. They must remember if they are to pursue this sort of policy that they are bound to aggravate both their own and their country's difficulties.
It is obvious from this sort of behaviour that there is very little business experience incorporated on the Government Front Bench. If they had had business experience, right hon. Gentlemen opposite would have learned long ago that in business it is not good policy to exaggerate one's difficulties. It is certainly not good policy to exaggerate those difficulties when they are financial and it is even more important not to exaggerate them if they can reasonably be expected to be temporary financial difficulties. Such exaggeration encourages doubt, arouses unnecessary suspicions about the financial integrity of the business or country, and reduces good will. This in turn makes borrowing both more difficult and more expensive in the long run. I therefore claim that the evidence of the first 10 months of the Labour Government proves that the crisis in confidence of last autumn and early spring was a self-inflicted wound which at times was crippling and at other times very nearly fatal.
It is obvious that by adopting and very correctly following the policies dictated by the Governor of the Bank of England—and I use the word "dictated" advisely, for surely no hon. Member opposite would claim that a self-respecting Labour Government would willingly introduce unpopular measures like high Bank Rate and a surcharge, however temporary, and a widespread credit squeeze, unless they were under extreme pressure to do so—there has been some improvement in the situation.
History will reveal exactly what role the Governor of the Bank of England has played in the financial affairs of the country in recent months and how his influence and his personalty persuaded the bankers of the world to come to the rescue of this country and, incidentally, to the rescue of the Government on two occasions in 12 months. A more generous Government would acknowledge the great part played by the Governor of the Bank of England in this respect and might in future prescribe for their patients that a little more "Cromer" and a little less

"Kaldor "would act as a tonic for the nation.
It is obvious that the strength of sterling has shown some improvement in recent months, but the question we have to ask is whether this improvement is temporary or permanent. I am afraid that it appears to be temporary. I think that I am supported in this conclusion by the fact that although large amounts of foreign money are now flooding into the country, the Chancellor of the Exchequer consistently refuses to reduce Bank Rate until he is absolutely certain that the position is secure. This, of course, is an action with which I am in absolute agreement.
It must also be remembered that much of the restored confidence, the feeling that things are a little better, stems from the inevitable relief, a breathing space, obtained from borrowing large amounts of money from overseas. But borrowed money has to be repaid and I am afraid that this borrowed money will probably have to be repaid and taken into account by a Conservative Government. This is something which will not have escaped the notice of my right hon. and hon. Friends.
In order to maintain the improvement in the balance of payments and the terms of trade, we are also told that more incentives to encourage industrial investment are to be introduced before long. I hope that this means the restoration of the investment allowances in one form or another. If I am right in that supposition, this can be claimed as something of a triumph for those hon. Members of the Opposition who, in a spirited debate which lasted five hours in the Committee stage of the Finance Bill last June, put their case very forcefully. In his devious and particular way, the Chief Secretary did his best at that time to justify the devaluation of the investment allowances which had resulted from the introduction of Corporation Tax. He gave the rather lame excuse that a full list of alternative methods was under examination, but he had no alternative to offer when he was discussing the matter.
During that speech he speculated whether methods used for investment incentives should be more direct, whether they should be like a grant or subsidy,


or for a more specific purpose, or whether they should be varied by rate or by region. We can all claim to be a little disappointed that the First Secretary today was not more encouraging and did not give us more information about how these investment allowances were likely to be introduced. Presumably we will now have to wait until the Government publish a White Paper on the subject. Before they prepare that, the Government would be well advised to give due attention to the words of my right hon. Friend the Leader of the Opposition, who, during the Committee stage on investment allowances, related his experience, when he was at the Board of Trade, stressing the need for more general modernisation of mechanical equipment generally. He warned that the case for discrimination as to types of machinery has not been proved so far. I hope that any allowances which are proposed will be as broadly-based as possible throughout the manufacturing industries, and that a great deal of discretion will be given to individual industrialists to decide just how those allowances should best be used.
It would be absolutely disastrous if the Inland Revenue, the Treasury, or in other words, the men from Whitehall, were to attempt to dictate how, when and where investment allowances were to be used. If it was decided that some manufactured articles were unsuitable for allowances—and I have one-armed bandits in mind, as they were raised on Committee stage—it should be possible to induce some scheme on disallowed manufactured articles. The right hon. Gentleman the Chief Secretary indicated during his speech on the Committee stage that there might be scope for regional variations in the investment allowances, with the object of helping selected areas, particularly those which had high rate of unemployment. To some extent this is already being done. We see it in the shipping industries and the developing areas. This is presumably what he had in mind.
The more recent Government decision to speed up the closure of the uneconomic coal mines makes the matter one of great urgency now. What we need is some sort of dramatic gesture which will attract the attention of industrialists and encour-

age them to bring industries to these areas of prospective high unemployment. We know that the Government have designated a number of development areas— many of them in South Wales—and that they have authorised the building of advance factories. One cannot escape the feeling, in many cases, that something extra special will be required to get industrialists to take the risk of bringing new industries to these areas, especially in a period when there is a fairly tough credit squeeze in operation.
One scandalous omission of the right hon. Gentleman the Chancellor—although I am not sure that it would have been appropriate to include it in the Queen's Speech—is any reference to the rate of Corporation Tax to be charged next year. Boards of directors, firms of accountants and members of the Inland Revenue have been thrown in a state of complete indecision and confusion as to the future rate. This is a state of indecision which is quite unnecessary. We must remember that this tax was foreshadowed by the right hon. Gentleman nearly a year ago and yet the rate is not even known today. We know it is not likely to be known until next April, when the Budget is announced, so that a period of some 18 months will have elapsed since the time it was announced and the time we know the actual rate to be made. I maintain that this delay is quite unjustified.
Another result of the Government's disastrous taxation policy has been brought to our attention by the renewed activity of Mr. Charles Clore in the takeover field recently. I am not suggesting that the particular company which he has under observation at the present time has been materially affected by this Government's financial policies in recent months, but it serves to spotlight the Government's mistaken idea, that by relieving tax on retained profits managements will automatically spend more on modernisation. This is something of a fallacy. The go-ahead managements will modernise whatever the cost, whatever the risks, and however difficult it may be. It is the undecided managements which we need to reach, to give them the incentives of investment allowances, to urge them to modernise more. It is the indolent and lazy managements—and I regret to say there are still some—who perhaps


earn their money rather too easily, and are more likely to use the new taxation regulations as an excuse to accumulate funds. Sooner or later they are going to become sitting ducks for the take-over kings like Charles Clore. I am quite certain that the Chancellor will agree that there is some limit to the amount of modernisation which one can carry out in certain industries. When that limit is reached it is surely more sensible to encourage firms and industries to pay out the money, to their shareholders if one likes, so that the money is available for other capital requirements by industry, which need extra capital in order to carry out modernisation programmes.
We might also have reasonably expected a more enlightened policy on money circulation as a whole. Money circulation remains a vital element in the bloodstream of industry. We require a good circulation of the bloodstream; it is essential if we are to have a lively and effective economy. Equally, if the Chancellor wants a lively and effective economy it is not sufficient for him to go billing and cooing to the Institute of Directors, to industry, or to the City, unless he gives a clear indication that his intentions are entirely honourable. By this I mean that if, by some mischance, a Labour Government were ever to get back into office with an increased majority, he would still be as amenable as he now appears to be. I am afraid that there are many people in the City and financial circles, who suspect that the right hon. Gentleman is only "all sweet reasonableness" because of the very narrow majority of the Government. It is feared that if he had a bigger majority he would be far more dictatorial.
If he is really sincere, and wants to co-operate with financial circles, I am hoping that he will consider very carefully indeed the suggestion which I understand is to be submitted to him within the next few days by the Council of the London Stock Exchange, that there should be an exemption of the first £500 Capital Gains Tax in any one tax year. While I freely admit that no Chancellor likes to part with any revenue that he can get his hands on, if he does not introduce something of this sort I fear that he is running a grave risk of bringing the taxation system of this country into ridicule and making a large section of

the community into a section of tax dodgers. As he knows, I have seen Capital Gains Tax working at first hand, and in recent months it has resulted in a tremendous fall in turnover on the Stock Exchange with the resultant scarcity of shares and the difficulties of raising fresh capital for new issues. However much this may attract hon. Members opposite, they must remember that this is an essential part of the fabric of the best-known capital-raising city in the world, which is the envy of many other capitals in the free world.
If investors forget—and I use the term in the widest possible sense—to return their capital gains, especially if those capital gains are small, then the chances of the Revenue recovering those amounts are very remote indeed. The Revenue has neither the time nor the staff to do it, and it possibly does not have the inclination. Certainly the tax they might get would not be worth the effort. To give one example, a few weeks ago there was a very successful issue of £50 million of convertible loan stock by I.C.I. There must be thousands of people up and down the country who had a capital gain of about £5 or under. Can the Chancellor honestly tell me that it is going to be worth the Inland Revenue's while to try and trace these small amounts?

Mr. Callaghan: It is not a typical example.

Mr. Box: It is a typical example, at the present time, of the difficulties of the Inland Revenue in tracing small amounts. It is beyond the Revenue's capacity. Already the Inland Revenue is under very severe strain. I am receiving an increasing number of tax queries from people locally—it started as a trickle, but the number is increasing all the time —which I think indicates the difficulties under which the Inland Revenue staff are working. We must remember that the real impact of the last Finance Act has yet to be felt by this Government Department. If the Chancellor of the Exchequer is not very careful, I fear that there is a real danger of a breakdown of the Inland Revenue system. Certainly we are faced with very serious delays which can be damaging, costly and harmful to relations between industry and individuals and the tax inspectors.
I turn briefly to the Government's prices and incomes policy. It seems to me that, however worthy and well in-tentioned this policy is, it is surely the classic example of shutting the gate after half the horses have left. We heard this afternoon that the policy of some unions has been apparently, "The Labour Government are not likely to last long and, therefore, let us jump on the band wagon, get as big an increase as we can and we will be all right for a year or two". I think that the concern which the Chancellor of the Exchequer expressed recently is hardly surprising in these circumstances.
While we can commend the Government for making the nationalised industries subject to the National Board for Prices and Incomes, they might treat that as rather a left-handed compliment because there would have been a tremendous storm if they had been excluded from examination. We know that an increase is forecast in the price of coal, and presumably that will be placed before the Board. The electricity price has been reviewed from time to time, and the gas industry is already subject to examination.
I would, however, remind the Government that they have not yet explained the very mysterious circumstances leading to the reference to the Board of a recent price increase application by the Wales Gas Board. The Wales Gas Board asked for an increase of l½d. per therm but was told by somebody in authority— presumably the Minister of Power—to put in for an increase of 2d. a therm so that the target performance of the Gas Board as a whole might be improved. This delay has already cost the Wales Gas Board about £250,000, and the cost is going up all the time.
Finally, having examined the White Paper on "Prices and Incomes Policy, An ' Early Warning ' System ", and having examined Parts A, B and C of the Appendix, there is, I think, only one obvious omission and that refers to the Post Office. We all know that the Post Office increased its charges by the unprecedented amount of 33⅓ per cent. in May this year. This is one of the largest increases we have suffered for a very long time. Who can say whether a further rise is contemplated? I hope that the Chancel-

lor of the Exchequer will give us an assurance that any further increases in postal charges which may be contemplated will be referred to the National Board for Prices and Incomes for thorough examination.

8.15 p.m.

Mr. Frank Tomney: We have just listened to a remarkable speech, in some ways, from the hon. Member for Cardiff, North (Mr. Box). As far as I could make out, it was nothing more nor less than bare-faced special pleading on investment allowances, Corporation Tax, ploughed back dividends in industry, and so on.
I want to deal first, without knowing what is in the mind of my right hon. Friend the Chancellor of the Exchequer, with the proposed new investment allowances. I do not know, and nobody can know, what the Chancellor will do about this matter. In our present economic situation, unless these allowances go, and are seen to go, to those industries with an untapped export potential, then to spread them across the range of British consumer industries which are already over-capitalised is asking for more trouble than we have. I hope that the Chancellor will resist any such proposals and will concentrate on those growth capital industries which reflect in exports overseas earning capacity which will come back to the Treasury. To do anything else would be asking for trouble in the long run.
I come to the main point of this debate. Some politicians take a flight from reality at some time in their political lives. The flight from reality of the Conservative Party has lasted a long time. It has seen during its 13 years' life at least four successive crises on which no positive action was taken, on which no economic philosophy was seen to be apparent to the electorate and in respect of which no forceful plan was presented to the nation for it to judge its capacity to climb out of the dilemma of deficit finance. This has gone on constantly year after year.
It does not do any politician any good to hide his own conscience from the facts of life, no matter to which party he belongs. The crisis of 1931 was seen to be


a crisis and was known to be a crisis by the people of this country. Unemployment was rife and widespread. Investment was down and industry was at a standstill. These factors are not apparent today. But the crisis is just as real. The population in general is apt to think that things are all right, or that they are not quite so bad, or that it is newspaper talk, or that most of it is above their heads. This is not so. This is why the Plan advocated by the Government through the First Secretary of State is a very courageous plan indeed. It has taken us down avenues of industrial and political philosophy which have never been trodden before. For any Minister, while not openly advocating statutory control of prices and incomes, to ask the nation to give the matter serious consideration if the voluntary early warning system does not work is an act of great political courage.
The Government deserve the greatest credit for thinking out these policies and for advocating them. This should have been done before. If we fail to get any cohereni: planning in our economic system, then as a nation we shall quite quickly get into difficulties from which we cannot recover. This has been said many times before, but year by year the difficulties become greater. The two big trading blocs with which we are competing—the United States and the Common Market—are, with reducing tariffs in Europe and a surfeit of capital in the United States, much too heavy and specialised for us to match, and the Common Market, with its policy of reducing tariff barriers between member nations, has a bigger market for internal consumption. We have our own Commonwealth export markets.
But the facts of this situation are changing, and changing quickly, and the facts are beginning to speak for themselves, such as the drop in our share of Commonwealth trade. They tell us of the need for forward, purposeful planning to find other markets and other industries, and what we have to decide is where the markets are and what the industries and the products are to be. That is why I said at the outset that investment allowances must be seen to operate where they will make the greatest impact.
Great Britain's position is unique in that we were a capitalised and industrialised country before any other nation in the world, and we had an established pattern of capital formation, an established production of established industries which did not change for many years although there were new methods, new materials, new techniques. But our ways have not changed as quickly as they should have done. We had also an established pattern of trade unions built on a political philosophy at the turn of the century. It had become established, and it was jealously guarded.
These attitudes are not changed very easily, and, of course, the people to whom we are making an appeal to go along with this Plan are those broad sections of the employed as a whole who are, in the main, very conscious of their hard-earned rewards and the standards they have obtained and maintained.
Reading carefully through the Plan one finds no direct reference to the distribution of national income in salaries or wages. It is in abeyance. Of course, it has got to be till we see the lines on which the Plan works. Let us assume that the Plan gets off the ground; let us assume that it is successful. Let us assume we get a gross national product in this country increased by £4,800 million, which is some 25 per cent. At this stage the Government of the day, of whichever party it is, have got to decide—and there are at least some Members on the Front Bench opposite who are becoming more convinced of the necessity for long-term, year-by-year, national, Government planning. Let us assume we can get it, and let us assume that the British industrial position, with the special allowances, ploughed back dividends, and so on, is changed. What do we do? We can make our decisions only on the basis of what our competitors do.
We must look, for instance, at United States industry. The United States are great competitors of ours, and very efficient competitors. Their net return per employee on capital investment is 3½ times that of Great Britain. Remember also that Great Britain's social insurance schemes are one of the first charges on the Treasury and a charge on exports. When one considers this, one gets some idea of the kind of path we have to tread and the dedicated purposes which will be


necessary for our workpeople and management all the way through, with the Government, to achieve the kind of system which will make our balance of payments in future of manageable proportions.
I do not think that the figure of £400 million is manageable. I think this country has to have a £400 million surplus in our position as a fully exporting nation and a high food importing country, which places us at a disadvantage compared with the Common Market countries or the United States or, indeed, the newly developing countries.
When one considers that the economic growth was only 2–4 per cent. in 1960–64 we see that that is where the stagnation took place. That was known on those benches opposite and nothing was done about it. The position was allowed to grow until the moment this party took office, and we found the debt of the size we did—and it was a debt around the nation's neck, and not just the Government's.
It has got to be dealt with. It cannot just be left, and there is no point in hon. Members saying here or elsewhere that there was a loss of confidence. Confidence is hard to maintain in the kind of world in which we have to live. It is in the interests of all of us to see that it is maintained.
But the act of the Government was an act of high courage. If we consider what kind of capital investment we have to get in industry, it has got to be of the order of a 55 per cent. increase by 1970, a net increase of 7 per cent. per annum. It is not going to be very easy to achieve, because alongside existing capital investment provision must be made for all the types of markets we are going to need.
This brings me straight on to the organisation of British industry. I have been looking at a survey recently made of the firms in this country. Only one firm is absolutely economical in its organisation and efficiency to take full advantage of those markets, and that firm is I.C.I. When one considers the fragmentation of the British exporting industries into small sectors throughout the nation one realises what a tremendous job there is of association and re-formation which has got to be undertaken under Government guidance before every one of those

industries can be proved to be organised to top efficiency in producing good dividends for the nation as it should. There is such a complexity of firms in industry. The Radcliffe Report on Monetary Reform came out a few years ago when even the Treasury did not know the full mechanisation of many markets. I did not fully understand it and I do not fully understand it even now, but at least it gave me an understanding of the industrial complex and the financial system.
Luckily, European countries in the Common Market have not been associating in monopoly structure across the market. This is to our advantage. We should be in great trouble if it were otherwise. They have set up subsidiary industries in the different countries. It may seem to be an argument for a greater association of firms, and this is something industrialists and trade unionists have to look at.
I should like to see a concentration of unions, with smaller numbers of them, and of managements, too. On the other hand, I should like to see more units of capital formation in this country as industrial export leaders. This is the only way to become more intense in export markets against the size of the competition we are encountering.
It is instructive to look at the premier industries of the United States, chemicals, aircraft, electronics and computers. Compare that with the output of the United Kingdom firms and the prospects of United Kingdom firms, and realise that it is in these industries in the future in which most of the pure and applied research will be done and from which new methods and new materials will be derived, and one sees quite quickly the enormous lead which the United States have got. The European countries are now fast catching up on this basis.
Take the chemical industry of the United States alone. It has a gigantic turnover of over 33·5 million dollars a year. This is 50 per cent. higher than that of the whole of Europe itself, and it is the leader scientific industry. The employees in the industry total 55,000, and the total employable force is only half of the chemical organisation and firms of Europe, including the United Kingdom.
If one looks at productivity per worker —and here is where the startling figure


arises—one sees it is 55,000 dollars per annum, which is twice as high as that of any comparable performance in Europe or the United Kingdom.
These nations are competitors in the capital field. This is why this Plan which we have today is a plan of great courage and foresight by my right hon. Friend the First Secretary, a plan to which he has devoted tremendous energy, and which he and which the nation want to see established, and adopted by the insured population of this country, as the greatest single act of faith since the formation of the trade unions for organised labour. What we are asking for is an early warning system to keep the economy in line, in tempo, with the nation's capacity. Indeed, we are asking people to forgo certain wages, which industry can afford, on behalf of the nation. This in itself is a tremendous act of faith and courage, if the country is prepared to adopt this Plan and to give the First Secretary the backing he wants.
Certainly something of this character is needed. The control of prime costs is important if any industry is to know where it is going year by year. Only by this method, by conscious planning over a period of years, can be shown what our position is to be and whether it can be held vis-a-vis that of other countries. This is being done by the Government with a very slender majority indeed. I do not want anyone on the benches opposite to be under a misapprehension that what we are asking for, and which we ask them to support, is not specious speeches here or anywhere else on the concept of the Plan, because they know that something of this order is needed. We ask for their support just because something of this order is needed if this country is once again to be what it was at the turn of the century—one of the prime manufacturing and exporting countries of the world.

8.32 p.m.

Mr. George Y. Mackie: I shall be brief as by this time of night hon. Members called upon to speak have a great fellow feeling for those hon. Members who are still left. I do not at this time have a great deal to say.
I have been gratified by the attacks on the Liberal Party made by the right hon. Member for Enfield, West (Mr. Iain Macleod). I was very pleased that the attack was in this House because outside the House he has been threatening homicide to the Liberals and encouraging his troops into battle to that effect. I cannot quite see why he is getting so angry. It is not as though he were like the hon. Member for Colne Valley (Mr. Duffy) who has a Liberal opponent with only 200 votes behind him. Admittedly in Enfield, West the Liberal candidate jumped to second place. This may make the right hon. Gentleman very apprehensive indeed of the Liberal Party.
I could not quite get the right hon. Member's reference to the Liberal Party selling itself into bondage. What appeared to hurt the right hon. Member was the fact that we had not extracted a price. This he could not understand. I can assure him that the Liberal Party has looked at the programme and does not specifically need a price to approve the sort of policies which it has been preaching for some time. My right hon. Friend the Leader of the Liberal Party has said quite clearly that the Queen's Speech has many Liberal policies in it. Of large parts of it we approve. Of course, we shall examine it and vote on the virtues of the measures as they come forward in this House. We shall vote on whether they are right or wrong without the fear that we may bring the Government down, which appears to influence the poll figures of members of the Tory Party voting in the Divisions we have so far had.
The Amendment we are discussing appears to be a most curious one in that it humbly regrets that the Gracious Speech contains no measures likely to redeem the failure of the Government's economic policy. We cannot accept this. There are many measures in the Speech which are bound to be and have been accepted by the Conservative Party— special attention to regions, efficient working of the Boards of little N.E.D.C.s, improved export facilities, agricultural expansion. All these are obviously measures which must improve the economy.
The reference to the policy on prices and incomes is curious because I had understood that Conservative Chancellors have themselves endeavoured to


work out an incomes policy. Why they should disapprove of such a policy I do not know. It is obvious that one could criticise, and criticise very hard, a number of the first results of the incomes policy. It is, of course, disturbing that wages have risen by such a large percentage. People are disturbed about this, but it does not invalidate the policy on prices and incomes.
I want to put our position in regard to this Amendment. The Amendment itself we regard as a silly one, not relevant to the occasion, and we see no reason why we should vote for or against it. We do not regard it as relevant and there-we propose to ignore it. We have on the Order Paper what we consider to be a constructive Amendment to the Address. There are certain things which, of course, we in the Liberal Party have criticised. We criticise, and have done before, the lack of any intention on the part of the Government to produce competition in this country. In a few days we shall be debating an Order to retain the 10 per cent. charge on imports. That is a temporary charge which has now been on for a year. This is an extremely disturbing position.
For the Government to talk about competitive efficiency in exports and then to admit that industry cannot compete at home, appears to be quite wrong. I cannot see that investment allowances inside this country will make industries efficient. The industries which require capital should be willing to spend in order to make larger profits. If they can make profits and have to be driven to spend money on equipment which will raise their profits, there is something wrong with competition in this country. This the Government must recognise.
Another matter on which we have constantly criticised the Government is the lack of any reference to a commitment to go into Europe in a proper way. The Gracious Speech says that we should continue our efforts, but the efforts have not been good enough. If we are to be competitive it is absolutely necessary for this Government to declare their intention of joining the European Community, and doing that as soon as conditions are right. If they did this they would create a new climate in industry and would do a great deal to persuade industry to pull up its

socks and prepare to tackle the new challenge which would come along.
We in the Liberal Party have also said —and have been criticised for saying it— that more incentives are necessary. This is true today and many hon. Members have spoken of the taxation position in other countries to show how our competitors operate, many of them in an extremely successful way. We feel certain that the answer is to make profits harder to earn but a great deal easier to keep in a competitive economy. This is sound common sense and has been proved to be correct in other countries.
The Government must, first of all, see that we get into Europe and so obtain the advantages of scale and so on which membership of the Common Market would bring about. Is this not a more suitable subject for hon. Members of the Conservative Party to consider for amendment to the Gracious Speech? It has been at the centre of their policy and the Leader of the Opposition has been closely associated with efforts to get into the Common Market. I should have thought that that was the most glaring omission from the Gracious Speech to which they should have drawn attention.
In short, we will vote for or against the Government on specific measures according to their virtues when they are brought before Parliament. We will not vote at the behest of the Government or the Opposition. We see no necessity to vote on this entirely irrelevant Amendment.

8.43 p.m.

Mr. Stanley Orme: The hon. Member for Caithness and Sutherland (Mr. George Y. Mackie) said that he was putting the Liberal Party's view before the House. I am still not clear just was that view is on this matter, although I assume that he and his hon. Friends intend to vote with the Government tonight.

Mr. George Y. Mackie: indicated dissent.

Mr. Orme: If that is not his intention, then he put his case extremely badly. That was the impression I got and I am sure that other hon. Members had the same impression.
I wish to concentrate on certain aspects of the National Plan and some of the


economic consequences which flow from it. In doing so, I will look a little beyond the Plan itself and into a few Socialist concepts as I see them. As has been stated many times, our economy is balanced on a knife edge. The Opposition left us a deficit and the more hon. Gentlemen opposite protest when we say that, the more people in the country believe we are right.
Unless we obtain increased productivity and export more we will not gain economic salvation. The trouble is that while we are attempting to do these things we are spending more than £2,000 million a year on arms. This has not been mentioned in the debate today. Nor is it mentioned in the National Plan— although it is relevant to the problems which my right hon. Friend the Chancellor faces today.
We must tackle these problems in what I would describe as a mixed economy, 80 per cent. of which is privately owned and 20 per cent. publicly owned. It is on the public sector that I particularly wish to comment.
Certain recommendations were made by the Devlin Committee for the improvement of the dock system and, particularly, for facilitating exports. It is one of those anomalies that the Manchester Docks are in Salford, but they came in for very little criticism by the Devlin Committee, primarily, of course, because they are run by one employer, and not by a multifarious conglomeration of employers as exists at the Liverpool and the London Docks. The Manchester Docks are not perfect, and much remains to be done for the dockers there, but the Manchester Docks represent one of the most important and highly efficient inland dock systems in the world. I hope that the reference in the Queen's Speech to the docks means that, if necessary, the Government will not hesitate to take them under public control. If there is one industry that cries out for some form of public control it is the docks industry, and I would advocate such a step.
The Plowden Committee is at present considering the aircraft industry. My union—the A.E.U.—along with the T.U.C. has submitted evidence to that Committee calling for public ownership of the airframe section of the industry.

We are expecting the Report within the next two or three weeks, and it is quite possible that it will recommend the public ownership, not only of the airframe section but of the aero-engine section as well. I have heard a lot in this House about the shortcomings of the industry, and the problems created by Government orders being cancelled, and so on, but as the Government, along with the nationalised industries, are among the largest purchasers, I can see no logical reason for this industry not being brought under public control.
Public ownership of the steel industry is not mentioned in the Queen's Speech. I and a number of my hon. Friends tabled an Amendment drawing attention to this and calling for early or immediate implementation of public ownership, because we feel that this step is relevant to our economy. We believe that if it is necessary for the First Secretary, the Chancellor and the Government as a whole to be in a position to plan our economy, they must have control of industries that are at present basic to the economy.
Many of my constituents work in the steel industry. There is no plant in the constituency itself, but there are plants very close to its border. The Guardian today reports that 300 men are to be laid off at the State-owned firm of Richard Thomas and Baldwins at Ebbw Vale, and I have been told by workers at the Lancashire Steel Corporation, which is privately-owned, that redundancy could result from difficulties and problems existing there. If that is the sort of thing that can happen in the steel industry, it calls for an overall plan. It is possible that in the foreseeable future the steel industry will consist of only five or six units. Possibly by the late 1970s or 1980s those units will be virtually computer-controlled. This will mean complete reorganisation.
The coal industry is being reorganised. My right hon. Friend the Minister of Power has to employ public money to ensure that redundancies are not created. He is ensuring that other industries are created so that people can be moved to suitable employment. This must happen in relation to the steel industry, too. It is therefore essential that the industry be publicly owned.
Having tabled the Amendment, which I support as drafted, and having taken


part in discussions with my hon. Friends, I am confident that the steel industry will be publicly-owned at the earliest possible moment. [Laughter.] The Opposition can laugh. They should draw no comfort from this, least of all the Liberals. It was not the Liberal Party that prevented public ownership. It will be the Labour Government who eventually bring the industry into public ownership. The industry will be brought into public ownership. The right hon. Member for Enfield, West (Mr. Iain Macleod) may smile, but in a Parliament of the not too distant future, with a far larger Labour majority, he will be fighting to stop steel nationalisation.
I have referred to our mixed economy and to the difficulties involved in trying to implement the necessary policies within it. I am very pleased that my right hon. Friend the First Secretary has seen fit not to introduce legislation to force trade unions to do anything at present. Such action would be disastrous. I think my right hon. Friend has seen the wisdom, and he will continue to see the wisdom, of trying to persuade people, not to compel them.
My reading of the situation inside the Parliamentary Labour Party and inside the Labour movement as a whole is that it is coming out firmly and clearly, not only for the public ownership of steel but for a further extension of public ownership to industries which have been neglected by the party opposite and by the country as a whole and which will have to be taken into public ownership if we are to have the steady economy we need. Hon. Members opposite can draw little comfort from that.
Much criticism can be made of the National Plan, particularly the fact that the targets appear to be too low. It is not satisfactory for the Labour Government to be expected to do in six years what the Tories did not do in 13 years. But a start has been made. It will be possible to make an assessment from that and to take action which can transform our society. The battle must be fought on whether a mixed economy and capitalism can succeed here.
The answer of the Liberals and of the Tories is to run to the Common Market. I believe that there is another

answer. I believe that the wealth of our industrial experience and skill can provide the goods that the world needs in return for the raw materials which we purchase to make those goods. We can redress our balance of payments situation. What we can produce the world wants and will continue to want. I therefore hope that after today's debate, and following actions to be taken by the Government in the future, we can set our sights on that course.

8.55 p.m.

Mr. Evelyn King: After waiting six hours to make a speech I have had to listen to the hon. Member for Salford, West (Mr. Orme) who blames all our troubles upon a mixed economy, advocates the nationalisation of steel and then goes on to advocate the nationalisation of the docks and finally of the aircraft industry. If I understood his concluding sentences, he was advocating the nationalisation of everything and I have three minutes in which to answer him. I think that even hon. Members opposite might think it preferable if I left that task to the Chancellor of the Exchequer.
Today has been an economists' debate. That is inevitable in the terms of the Amendment. One of the troubles of such a debate is that the atmosphere becomes a little rarefied. The terms used become esoteric and statistics become larded in the paragraphs to such an extent that in the end I feel that I want to go back and ask what is the object of the exercise.
I hope to say quite briefly what I believe should be the target to which the whole debate should be directed. I have the good fortune to represent South Dorset, and the target is particularly appropriate to that county where there are 50,000 people, or 15 per cent, of the population who are over the age of 65. We have heard from both sides of the House—and there was some discrepancy in what we heard—about rising wages. According to the Chancellor earnings had risen 8 per cent, in eight months. According to the First Secretary they had risen 7 per cent, in 12 months. In parenthesis I should have thought that it was a reasonable request that the Government spokesman in reply might clear up the figures and tell us which are correct. Right hon. Gentlemen should not contradict each other.
But if there has been a wage increase of either of these percentages it is very little use to constituents so huge a proportion of whom draw no wages at all. This is where the real hardship comes, and this is the simple point which no Front Bencher opposite and, to be fair, few on this side of the House, have attempted to deal with. However wages may have gone up, prices have gone up by 4·7 per cent. One thinks of a retired farmworker or seaman or petty officer, of an army of retired persons in villages in Dorset and indeed all over England who have been living in a cottage on £5 a week. In the last 12 months that sum has been reduced to £4 15s. That is not an uncommon example.
In the few minutes at my disposal that is the only point that I seek to make. Whatever may be the relation between earnings and income, I urge right hon. Members opposite not to forget those who have had no rise in income, for the retired earn no wage. If I went back to my constituency and asked my constituents what they most wished to see, the first priority would not be extra money on education, housing, roads or hospitals. They would say to me, "Make £1 equal £1."

9.0 p.m.

Mr. Reginald Maudling: The debate has closed, I think all will agree, on a very good note with the remarks of my hon. Friend the Member for Dorset, South (Mr. Evelyn King), which were so well worth listening to and brought our minds back to a problem which we have tended to overlook in the arguments which we have had.
The debate has, of course, been overshadowed by the problem of Rhodesia. It led to an interruption of our normal procedure and, for many of us, it has distracted our thoughts from other problems. This is bound to have had its effect on the whole discussion of the Gracious Speach. This evening, I do not intend to refer at all to the Rhodesian situation. References in passing are unwise and add nothing helpful. I shall refer to a number of the problems and questions which have been raised in the debate but which, on the whole, have been left unanswered by the Government's spokesmen. No doubt, the Chancellor of the Exchequer, who casts his eye over the

whole field of Government activity, will be able to answer all the points and questions which have been put.
The first feature of note in this Gracious Speech is the tactical exercise which it contains. Its object is to ensure the support of the Liberal Party—all of them—in the Division Lobby whenever necessary. I do not know why the Prime Minister thought it so important to do this. There is very little danger of the Liberal Party voting in such a way as to endanger the Government at the present moment. Considering the results at the recent by-elections, they would be very bold men—-I do not say brave—if they courted an election now. The Leader of the Liberal Party is rather fond of saying that he leads his troops towards the sound of gunfire. I have no doubt that he makes sure, before he leads them, that their weapons are loaded only with blank cartridges.

Mr. George Y. Mackie: I remind the right hon. Gentleman that Liberal by-election results just before Roxburgh were not very good, but he will remember the result there.

Mr. Maudling: The hon. Gentleman's intervention exactly confirms what I said about blank cartridges. A blanker cartridge I have never heard.
The omission of steel nationalisation from the Queen's Speech is the most significant part of the whole tactical exercise by the Government. The Prime Minister has made a good deal of reference to it. He tried to explain away why he had not put steel into the programme on this occasion. If I may say so in his absence, I thought that I had never seen him more uneasy, like a mouse on hot bricks, jumping about all over the place and not knowing what to do or say next. This was before he had to answer the questions from the hon. Member for Ebbw Vale (Mr. Michael Foot), of course, and now we want to know the answers to those questions. Although the debate on the Queen's Speech has gone on for several days, there has been no response from the Government Front Bench, as far as I know, to the questions which the hon. Gentleman asked about steel.
His questions were simple and clear. First, was the account of the reason for the omission of steel nationalisation given by the correspondent of The Times


accurate? Second, could the hon. Gentleman take it for certain that steel nationalisation would be included in the next Labour Party election manifesto if his Government had not succeeded in nationalising it before then? Those were his direct and simple questions, but he received no answer.
It is important that an answer should be given because upon it depends whether the Government will get away with their attempt to bamboozle the Liberal Party and the country as a whole into thinking that they are, as a Labour Government, adopting a moderate programme. The omission of steel is designed to persuade people that they are now a middle-of-the-road, moderate Left-wing, radical Government. Yet the true answer to the question put by the hon. Member for Ebbw Vale must be that the only reason for the postponement of the nationalisation of steel is simply that they have not at present got an adequate Parliamentary majority to carry it through. If ever they had an adequate majority for that purpose I presume that this would be one of their first measures.
There are other examples in the Gracious Speech, under a certain amount of obscure language, of their tendency to nationalisation, if I may use that word. We read,
Legislation will be introduced to remove statutory limitations impeding the proper use of the manufacturing resources of the nationalised industries 
and
A Bill will be introduced to regulate priorities in privately sponsored construction ".
What these two rather obscure phrases mean, in effect, is giving power to the nationalised industries to indulge in a form of creeping nationalisation over an unlimited field and also to impose upon a large section of an important industry licensing controls and rationing once again on a permanent basis.
The point is made about the limitation on the powers of the nationalised industries. The simple fact is that there is no limitation whatever on the ability of the nationalised industries to carry out their proper duty in accordance with the statutes and duties laid upon them by Parliament. What the limitations are entirely designed to do is to ensure that they do not use their privileged position

of a monopoly in their own field and access to Government finance to compete on an unfair basis with private enterprise. The purpose of these Government proposals must be to ensure that nationalised industries can extend their activities without any regard to an abuse of proper competition with private enterprise which, after all, provides by far the overwhelming part of the export trade of this country.
The Gracious Speech is designed to obscure in every possible way the consequences of the policies pursued by the Government in the last 12 months. Nowhere do we read in the Speech of these consequences in the form of higher taxes, higher interest rates, a credit squeeze of a character and duration never seen before and cuts in public expenditure of a savage nature.
I should like to ask the Chancellor of the Exchequer some definite questions about the levels of public expenditure and the proposals which the Government have in mind. What about the hospitals? My right hon. Friend the Member for Altrincham and Sale (Mr. Barber) put forward some cogent points on this matter. The hospitals were told in August that the Chancellor's July measures would have no effect whatever upon the hospitals, either in maintenance or in new construction. The Prime Minister said the same thing a few days ago. He said that he had excepted hospitals, schools and houses from the measures of restriction.
But what are the facts which are slowly beginning to emerge? We have heard already that the hospital at Exeter, a very large proposal, is to be shelved indefinitely. We have heard about St. Thomas's Hospital extension scheme, which has been put back, if necessary, indefinitely. What are the facts? Is there a cut back in the hospital programme? Are these important projects being cut back or is it true, as the Government have said, that all hospital building has been exempted from the cuts imposed by the Government? I hope that the Chancellor will explain this in his reply, because it is an important matter to which he must know the answer.
The next questions are about education. My right hon. Friend the Member for Altrincham and Sale gave an example


of a school which had been held back by lack of finance. We have been told in the Gracious Speech that the Government
will continue to develop higher education ".
How much development of higher education have we seen? In the measures of July we saw a severe cut back in the development of higher education in this country. The Minister of Education has announced that the reduction in the size of classes to 30 pupils, which has been talked about so much in Labour Party propaganda, will be deferred until 1983. All these are examples of the cut back in public expenditure which has occurred as a result of the Government's policy. They have been announced but they have been glossed over in the Gracious Speech.

Mr. Tam Dalyell: Would the right hon. Gentleman accept that there are 29,000 students entering training colleges this year, which is double the number of seven years ago?

Mr. Maudling: I would accept that with pleasure. It seems to me one more example of what we have always said— that the process of development under Conservative Governments has proved to be immensely rapid.
I turn to the road programme. In March the Minister of Transport told us, "We are determined not to cut the road programme ". We should have been warned. In July £30 million of the road programme was postponed. In December £25 million of the classified road schemes were deferred. The Prime Minister argued that cutting back on all these things was cutting back on luxury building. He said," We are cutting back on luxury building in order to promote the building of houses in this country ". Hospitals have been cut back, and schools. I gather that the Chancellor now says that hospital building has been increased. If the building of St. Thomas's and Exeter has been increased, we should like to hear. Was expenditure on roads increased or cut back? Was expenditure on higher education increased or cut back? If the Prime Minister says that all these were increased, let him explain how. I do not think that the message which the Chancellor gave the House in July was a message of increasing; it was a message of cutting back. The Prime Minister said it was

necessary to cut back on luxuries in order to build more houses. This is the Prime Minister's own argument—the "candy floss "argument that he talked so much about as Leader of the Opposition. It is nonsense now, as it was then.
The Prime Minister knows that the amount of so-called luxury building is tiny. [HON. MEMBERS: "Oh."] Offices account possibly for 3 to 4 per cent. of the total building effort; shops a good deal less than that. In any case, investment in new shops is probably a better way of saving labour in this economy than anything else one can think of. The truth is that the Government are having to cut back on hospitals, education and roads in order to achieve a house-building programme of less than 400,000 a year.

The Prime Minister (Mr. Harold Wilson): The right hon. Gentleman knows the facts.

Mr. Maudling: If the Prime Minister thinks I am wrong, perhaps he will get up and say so. If he thinks that the Government have increased these things, he should say so. But he is not very forthcoming this evening and I can well imagine why. It is because the answer is the opposite to what he is muttering.
Let us consider the proposals of the Labour Party about social welfare. What has happened to the income guarantee and the half pay on retirement proposals? There is no sign of them in the Gracious Speech nor in the National Plan. The Plan clearly lays out that neither the income guarantee nor the half pay on retirement are expected by the Government to have any effect upon the level of consumption between now and 1970.
We have not heard much about mortgage rates today but we heard a lot about them from the First Secretary of State during the election campaign.

Mr. George Brown: No one except me?

Mr. Maudling: We still have not heard anything about this fairly clear undertaking that, under a Labour Government, the rate or interest charged upon mortgages to house-owners would be reduced. In fact, it has been increased and maintained at record levels and solely because of the policy of the Government. That


is the point we make, but we have received no answer. We have received only vague promises about something in the future. The Prime Minister himself has made such a vague promise. But nothing has ben done and nothing emerges in the Gracious Speech to meet one of the most concrete promises ever given to the electorate.
Then there is the Ministry of Technology—another of the great promises of the party opposite. Under the dispensation of right hon. Gentlemen opposite we were to have great advantages, a great movement forward and great progress in technology. What has happened? Lord Beeching has been sacked, so we were told last night, although I gather that there is a certain amount of doubt as to whether or not he was sacked. However, the Minister of Technology said last night that Lord Beeching had been sacked. In Lord Beeching's place we have the Minister of Technology, whose contribution to the subject is not of the most outstanding. Finally, we have the level of increased taxation. It has increased by over £600 million a year in less than a year.
All these factors are the consequence of 12 months of Labour Government and they did not appear in the Gracious Speech. They constitute the reason for our Amendment.
At the moment the Government can rightly claim that the level of employment is high and that the balance of payments position has been improved. This is precisely as we expected. [HON. MEMBERS: "Oh."] If hon. Members opposite want a justification for that statement, they should look at the Government White Paper of 26th October, which said precisely what I have just said. But what we have with the improved balance of payments and the high level of employment is the highest level of taxation, the highest level of interest rates, a strict credit squeeze and pressure on prices.
Either the measures which the Chancellor has introduced to deflate the economy will result in higher unemployment, which is what may happen, or, if that does not happen, the level of imports will remain far too high. I agree that exports have done well. The right hon.

Gentleman himself referred to that today. But does he really think that the increase in exports in the first few months of this year had anything to do with the Government? He claimed that the first part of the year showed an improvement in our export trade and so it did. But no one who knows anything about trade or industry would imagine that the level of exports in the first months of the year had anything to do with the policy of the present Government.
The truth, as we have said on more than one occasion, is that the Labour Party inherited a situation in which the level of exports was already beginning to increase and to increase substantially, precisely as we said. The gap between the delivery of exports and their ordering is one of several months and, when we said during 1964 that the winter of 1964–65 would show a substantial increase in the level of our export trade, that is precisely what happened.
We have heard so often now the excuse by Labour Members about the gap of £800 million with which they were supposed to have been faced. They faced a gap of £800 million only if they were looking backwards. The simple fact is that by the time they came into power the problem of 1964 had been handled and, as the Prime Minister himself said, handled without any loss of confidence in sterling whatever. It was only in November, 1964, only after a month of Labour Government and only after the weeks of the muddle about the surcharge and muddle about the Bank Rate and the inflationary Budget in November, 1964, that confidence in sterling collapsed at a time when the Prime Minister himself admitted that a new development had arisen from confidence factors in the middle of November, 1964.

Mr. Sydney Silverman: Was not the Government policy which the right hon. Gentleman has just said was the cause of the loss of confidence in November last year the policy which at that very time the right hon. Gentleman was saying he would have followed if his party had been returned to power?

Mr. Maudling: When I said that the Government inherited both our problems and our solutions, I did not realise what a hash they would make of them.
The handling of the surcharge was inept beyond belief. The handling of the Bank Rate, the announcement of Capital Gains and Corporation Taxes, which did great harm to the movement of money across the exchanges and great harm to the capital side of our balance of payments, and the inflationary November Budget were clearly, as admitted by the Prime Minister in his speech of 23rd November, last year, the cause of the confidence crisis from which the Government have been trying to extricate themselves from then onwards.
The problem now obviously is to maintain the level of prices as competitively as possible and the main danger which has arisen in the last year of Labour Government has been the immense pressure on prices. We have seen a rise in the level of prices far higher than the economy can sustain if we intend to maintain our export trade. The source of this rise in prices is fairly clear to see. First, there is the increase in the level of taxation. Secondly, there is the increase in the level of incomes. In both cases it is clear that the policy of Ministers has made a major contribution to the increasing level of costs and, therefore, the increase in level of prices.
About 70 per cent. of the constituents of prices is added in this country. If the First Secretary wants to see why his own incomes policy has been driven through on so many occasions, he need look no further than his own colleagues. The level of prices has risen by about 5 per cent. over the last 12 months and the main contributor has been the Chancellor of the Exchequer himself with the taxes which he has imposed, taxes falling on the level of prices of things consumed in this country. The other main problem has been the level of incomes. We were asked about an incomes policy.

Mr. George Brown: Which incomes?

Mr. Maudling: All incomes. As I said to the First Secretary earlier this afternoon, any policy on incomes must be a policy to deal with all incomes, from whatever source. What is absolutely clear is that one cannot sustain an incomes policy on the basis of suppressing prices alone. This is where the First Secretary is making one of his great

mistakes. His other mistake is to assume that, when one has a document signed in principle, one has a policy. A document and a policy are entirely different things. One can only sustain a policy of incomes if one sustains it with action and determination. It is no good taking action to consider at a Government level, the price of instant coffee, meat pies or, pickles, or whatever appears in this White Paper. If one tries to maintain a level of prices on a statutory or compulsory basis one erodes the level of profits and makes it absolutely impossible to sustain the level of investment, the level that is necessary, all that one does is to achieve a level of prices in which competition becomes ineffective.
One cannot maintain a prices policy by concentrating on prices and ignoring costs. By far the most important element in costs is the element of personal income. This is where the First Secretary's policy is going overboard, because while he is concentrating on prices the level of incomes is moving up and moving up faster than the level of productivity. The other day the Chancellor said that the level of earnings had risen by 8 per cent, in the last year. The level of production has risen not one single bit in a year. I hope that the Chancellor will comment on this when he replies. It is an extraordinary thing that the level of production for the last recorded month is two points below what it was in January of this year. Not only has production been stagnant, it has, if anything, been falling, and with the level of employment recorded, productivity has also been falling.
We therefore have a situation in which productivity has been falling and in which incomes have been rising something like 8 per cent. from the Chancellor's own figures. Has there ever been a greater threat to price stability in this country? It may be said that last year also the production index showed very little advance between the early part of the year and the later part of the year. But last year we were seeing a very large build-up of work in progress in industry, particularly in engineering. This year work in progress for the first time for several years, has been falling. The fact is that output, effort and production in this country have been falling over the months since January, 1965.
Production has been falling and incomes have been rising at a very rapid rate indeed. The result of this can only be a rapid increase in prices and a rapid increase in prices can only result in our competitive position being impeded and our balance of payment situation being undermined. [Interruption.] This is the sort of silly remark that the First Secretary often makes. I have tried very hard, as did my predecessor, to establish an incomes policy in this country. We know that an incomes policy is not a matter of talk and waving papers and declaring that a new dawn has appeared. An incomes policy is a matter of persuasion, effort and political courage. That is what we do not see at the present moment. We have heard much talk about an incomes policy, but we have seen very little action. We have seen the results working out as badly for the economy and for the level of costs and prices as ever it has done in the experience of this country. That is why in the Amendment we have laid stress on the failure of the incomes policy. We believe that the level of prices and of costs and the competitive position of British industry are of fundamental importance.
Everything proposed by the Government depends on their ability to maintain a competitive level of prices and on their policy for Government expenditure. I would ask the Chancellor of the Exchequer, by the way, how much new Government expenditure is included in the Gracious Speech. There are many proposals, all of them involving Government expenditure. Will the right hon. Gentleman tell us how much additional expenditure is involved in the proposals laid before the House? Both in their proposals for Government expenditure and in their inability to deal with the problem of income they have shown themselves quite incapable of tackling the main problem of the economy, which must be to maintain the level of prices for the sake of our export achievement and for the value of the savings of the people. It is for that reason that we ask the House to censure the Government this evening.

9.30 p.m.

The Chancellor of the Exchequer (Mr. James Callaghan): I listened with very great interest to what the right hon. Member for Barnet (Mr. Maudling) said about

prices and incomes. He said much with which I agreed. But there is one simple question to which I heard no answer: does he still adhere to the necessity for a prices and incomes policy?

Mr. Maudling: Yes.

Mr. Callaghan: I am glad to hear that. I will return to it. I am sure that it will have been heard with interest by the hon. Member for Oswestry (Mr. Biffen). The mantle of Enoch has fallen upon Oswestry today.
I agree with the right hon. Gentleman that the shadow of Rhodesia has hung heavily over this debate, and I think that it has been partly the reason why it has been a scrappy and sporadic debate. Some of the attacks which we were promised certainly have not materialised. For example, the merciless attack which we were told would come from the right hon. Member for Taunton (Mr. du Cann) does not seem to have shown over the horizon—and no more has he.
But there is another reason why the debate on the Gracious Speech has been sporadic and the attack has appeared so unco-ordinated, and that is simply the inability of the Opposition to deploy any central theme from which they could attack the Government's policy. We have had a great deal of destructive criticism of what the Government are doing. Until the right hon. Gentleman's intervention at the very last moment just now, we did not know whether there was even one vital aspect of our policies which they supported. But I gather that they support us on a prices and incomes policy. [Interruption.]Do they not?
The official spokesman for the Opposition—I beg his pardon; I do not think that he is the official spokesman for the Opposition on this matter. I had better be careful. The official spokesman for the Opposition was very careful not to say whether he agreed with the prices and incomes policy. The unofficial spokesman for the Opposition, who has a degree of intellectual honesty which makes him say what he really believes on these matters, does believe in an incomes policy. He wants to make it work, and he tried to make it work. I wish that the same were true of the rest of his colleagues.
I am choosing my words very carefully about this, because every Member opposite, including the right hon. Member for Wolverhampton, South-West (Mr. Powell) and the hon. Member for Oswestry, fought the election on the Tory Party manifesto, which said:
An effective and fair incomes policy is crucial to the achievement of sustained growth without inflation.
The hon. Member for Oswestry now thinks that this is transparent nonsense, and I respect him for his opinion.
But right hon. and hon. Members opposite went further. The hon. Member for Oswestry was attacking the fact that he thinks that we shall have to take further action. That is right. My right hon. Friend has announced, and the Gracious Speech makes clear, that we are taking further action. But the hon. Gentleman fought the election on the same principle. His manifesto said:
We shall take a further initiative to secure wider acceptance and effective implementation of such a policy.
Does the party opposite still stand by that. Of course, any party in opposition is entitled to rethink its position, whether it be on the east of Suez policy, or whether it be on incomes and prices, but we are entitled to know, I think, from the Opposition, and from the Leader of the Opposition, who has given no clear lead in this matter, where they stand on this issue of an incomes policy at the present time.
The hon. Member for Oswestry was both courageous and accurate—including the point at which he said that this was the nub of our policy. I readily agree with him, and, indeed, we have all said this, and he said it as clearly as anybody. And when I put the specific question to him he was absolutely frank in his answer. He said he believed it ought to be abandoned; he did not think this was the sort of thing which should be whispered about in the Smoking Room but the sort of thing to be said on the Floor of the House. The hon. Gentleman knows I am being perfectly sincere. He believed that this should be answered and debated in this House.
He said the incomes policy should be abandoned, that it could not succeed, and that he himself would go back to the policies followed by his right hon. Friend

the Member for Monmouth (Mr. Thorneycroft) when he was Chancellor of the Exchequer. I think I am interpreting the hon. Gentleman accurately.
I think that that is a perfectly logical and tenable position. It is one perfectly open to the Opposition to take up. It would present a very clear issue of principle for the people of this country to decide. They can decide whether they want to fight through an incomes policy and a prices policy with all the difficulties found in these unexplored and uncharted seas. The Opposition have not been backward in pointing out the difficulties.
Both parties fought the election on it, and therefore it was nationally agreed policy—at least, up to tonight. I do not know where the right hon. Gentleman stands in relation to the rest of the policy. It was agreed policy. We should all try to work this, because we do not want as a nation to go back to those policies under which we had growing unemployment, under which we sacrificed growth in perpetuity, as we seem to have done by the measure of growth which other countries have been able to sustain.
We have been trying to carry the incomes policy one stage further through the accent on productivity. Hence the National Plan. Hence the positive proposals put forward. Again, it is perfectly open to hon. Gentlemen to say, "We dismiss the National Plan as a tissue of the imagination which cannot possibly be fulfilled." They can perfectly well stand up and say this, and it is perfectly open to hon. Gentlemen to argue that the forces of the market should be allowed to determine the way the country should go. I would like a debate on this—and my right hon. Friend was referring to this this afternoon in language which got across to some hon. Gentlemen opposite. I agree with my right hon. Friend. What I think is the most despicable course of all is to damn with faint praise, and that is what the Opposition have done and that is why the Opposition are not presenting a credible picture and not presenting any credible opposition to the Gracious Speech. They are willing to wound but afraid to strike. They do not know. Well, they know, and many of them secretly would like to abandon the struggle for an incomes policy; many of them would secretly like to abandon the idea that we should have a


National Plan in order to secure increased productivity; many of them genuinely think it would be far better to let prices rip. I am getting nods of assent from the other side even as I say it. But why should it be left to me to say it? Why do they not stand up and say, "That is what we believe in"? But they are afraid to say it until the right hon. Gentleman got up this afternoon and that is why they are not presenting a credible and coherent policy.

Mr. Edward Heath: What the Chancellor is saying is that what he and his right hon. Friends propound as an incomes policy is the only incomes policy, and that the way in which they handle it is the only way in which it can be handled. Neither of those things do we accept. What we do remember is that he and his right hon. Friends and their supporters sabotaged every attempt to get an incomes policy. That is what they did. They did it in this House and they did it in "Neddy ".

Mr. Callaghan: I do not think we could have done more to sabotage an incomes policy than the right hon. and learned Member for Wirral (Mr. Selwyn Lloyd) as Chancellor of the Exchequer, who in one and the same breath, reduced the Surtax and denied nurses another 6d. a week. That is not likely to get assistance with an incomes policy. I think one of the things we can claim that this Government have tried to do—and heaven knows in these things nobody is going to pretend to be perfect, and I would welcome honest and constructive criticism from hon. Gentleman opposite—but one of the things we have tried not to do is to create two classes in this country. We have endeavoured to ensure that justice which is secured through the fiscal system shall apply to all.
Hon. Gentlemen opposite opposed the Capital Gains Tax. To us this was essentially a weapon in trying to secure the climate for an incomes policy. But they opposed it, and so long as they oppose this kind of Measure then I believe, in all honesty, they ought to cast aside this pretence that they believe in it, and they should stand up and be counted. Then we shall know what we are fighting and we shall strip away a lot of the pretence.
There are some measures on which the Opposition are in agreement. They are in agreement with us about the need to balance our payments. They agree with us that there is a formidable and substantial deficit to be overcome. They disagree with us about the nature and cause of it, and whether we could have avoided it, and all the rest, but they do agree that there is a problem here, and I am glad they do. There was a time, way back about June or July, when, if anybody on this side of the House talked about an £800 million deficit, there were jeers and groans from the other side of the House. Now they have returned to their own vomit. The right hon. Gentleman the Member for Enfield, West (Mr. Iain Macleod) spent the first 20 minutes of his speech talking about it. I am very grateful to him. I hope he will go on reminding the country of the deficit which existed, which exists now, which is being overcome, which is being halved this year, and will be eliminated next year.
The other interesting thing about the debate we have had over the last few days is that there seems to have been more interest and excitement on the part of the Opposition about what has been left out of the Speech than what is in it. There are certain measures which, if I were to judge from their speeches, they would like to have seen in it; but there has been very little discussion about some of the things which are in it. I wish to rehearse some of them again and to ask whether the Opposition supports us on these measures or not—in principle; I do not ask them to commit themselves to the full legislation.
Do they agree with the proposal to introduce a Bill to assist the financing of the coal industry and to redeploy its manpower? Do they agree with the proposal to take powers to acquire land for the community and to recover a part of the development value realised in land transactions, or are they against it? Do they agree with the proposal to introduce legislation to reform the leasehold system, including provision for leasehold enfranchisement?
The right hon. Member for Bexley (Mr. Heath), when he spoke at the beginning of the debate, said that this was one of the old faces that was reintroduced. I have been listening to 13


Queen's Speeches before the last one and never heard it in any of them. This is the occasion on which legislation is going to be introduced. Can we rely in principle on the support of the right hon. Member? I hope he says yes, because otherwise he will put some of his friends from South Wales in some difficulty.
What about the Bill to regulate priorities in privately-sponsored construction? Do they agree with that or not? If so, why on earth did not some one say so during the debate? I shall not go through the other Measures now. I take it that the Opposition are obviously in agreement with the proposal to increase public service pensions, although, with that usual dichotomy which distinguishes them, while one right hon. Member says he wants to see it introduced, the other starts to count the cost and to say, "Can we be sure that we have included it in the estimates of public expenditure?"
The right hon. Member for Barnet will know from his experience the difficulty that any Chancellor of the Exchequer has in these particular matters. I have said that we are going to try —and this, if we succeed, will be the first time it has been done—to get the increase in public sector expenditure in this country down to 4¼ per cent. a year in real terms from now until 1970. This is our ambition. I say this to the right hon. Member. On every one of the proposals included in this programme, namely the proposal for the rebate on rate relief, the proposal for public service pensions and the other proposals that will not come into effect next year, but will be introduced next year, namely the reform of the rating system and the new system for Exchequer contributions, the proposals on wage-related unemployment benefits—all of these have been included in the public sector expenditure review and they come at the moment within the definition of 4¼ per cent. a year increase in real terms.

Mr. Arthur Jones (Northants, South): Will the right hon. Gentleman include in those figures what his estimate of the increase in housing subsidy will amount to?

Mr. Callaghan: The increase in housing subsidies will form part of the reform of local government financial

arrangements to which I referred in what I said a moment ago. It is all part of it and included in it.
On a great many of these Measures there is no doubt that the Opposition has no substantial objection to raise. The only objection they have raised so far as I see on the Queen's Speech as a whole is that we have not included steel. They could have included it in their Amendment. It might have been slightly embarrassing if they had done so. It is a demonstration of the phoneyness and falseness of the opposition with which we have been faced over the last few days that this should be so.

Mr. Box: Mr. Box rose—

Mr. Speaker: Order. The right hon. Gentleman obviously has not given way.

Mr. Callaghan: I should like to give way—[Interruption.]If the hon. Member wants to wave my election address at me he can do so.

Mr. Box: Will the right hon. Gentleman give way?

Mr. Callaghan: If the hon. Member would only be patient I should say what I was about to say, but now I am not sure whether I will. I should like to give way to an hon. Member for a Cardiff constituency, whom I congratulate on being elected as vice-chairman of the Conservative Party's finance committee, but if he is to interrupt me I hope that he will say something worth while—and if he goes on reading my election address I am sure that it will be worth while.

Mr. Box: The right hon. Gentleman has been very anxious to point out what other hon. Members had in their election addresses. Is he aware that he had nationalisation of steel in his? Is he also aware that he warned that one of the most important contributions for steel workers in the constituency was that we should escape from what he described as successive stop-go Conservative policies?

Mr. Callaghan: Yes, Sir, and I should not be at all surprised if the hon. Member reads my next election address if he will not see the first part of that there again. I do not know what the right hon. Member for Enfield, West is slapping his knee about. If he really


thinks that we do not intend to take the major part of the steel industry into public ownership, he had better think again. [HON. MEMBERS: "When?"] I do not mind very much whether or not the hon. Gentleman believes me. The simple truth about this industry—and this must be faced—is that it is in need of substantial reorganisation and that it will need substantial public money to carry it out. Nobody can dodge this question.

Hon. Members: When?

Mr. William Yates: Mr. William Yates (The Wrekin) rose—

Hon. Members: Sit down.

Mr. Callaghan: I have been asked a specific question and I would like to get on with my speech.

Hon. Members: When?

Mr. Callaghan: I very much regret that it is not possible at this moment to make the major changes in the steel industry that are necessary for the health of the nation, but—

Several Hon. Members: Several Hon. Members rose—

Mr. Callaghan: I have less than 10 minutes in which to complete my speech. Anyone who does not believe that these changes will be made is living in a fool's paradise. Of course, if the Opposition will offer us facilities—[HON. MEMBERS: "No."] If they will not offer us facilities then we shall undertake the necessary reorganisation of this industry when we have got the majority to do it. [Interruption.]

Mr. William Yates: Mr. William Yates rose—

Mr. Speaker: Order. The hon. Member for The Wrekin (Mr. William Yates) has no prescriptive right to bob up and down.

Mr. Callaghan: At least, I can say this. We are not dodging the question.

Mr. William Yates: Really!

Mr. Callaghan: I would very much like to know whether the Conservative Party stands on a number of issues—for example, prices. It is essential to keep prices down, is it not?

Mr. William Yates: On a point of order.

Hon. Members: Sit down.

Mr. Speaker: Order. I am listening to the hon. Member for The Wrekin putting a point of order. I hope it is a real one.

Mr. William Yates: I hope so, too, Mr. Speaker. In view of what we have heard from the Chancellor of the Exchequer, I should like to move, That this House do now adjourn.

Mr. Speaker: There is no point in the hon. Gentleman raising a ridiculous alleged point of order.

Mr. Callaghan: Perhaps I could now clear up the question which the right hon. Member for Barnet asked me about hospitals because he put this point to me and I should like to answer him now. The programme was not reduced by the measures brought in in July. Indeed, it is true to say that in the spring of this year we found an extra £5 million of capital—that is, for 1965–66—for hospital building. My right hon. Friend the Minister of Health has had, as have other of my right hon. Friends, to cast a realistic and appraising eye over the programmes which were left behind by the former Administration. It is in this sense that the programmes have been made realistic to the capacity of industry to carry them out.

Several Hon. Members: Several Hon. Members rose—

Mr. Callaghan: With respect to hon. Gentlemen opposite, I will not give way any further. Only about six minutes remain for me to complete my speech.
The former Chancellor of the Exchequer knows better than any hon. Gentleman opposite that what happened during the last 18 months of Tory Government was a disgrace to any sensible Administration. Burdens were piled on the Exchequer and on the construction industry, and it was impossible to carry them out. One of the things for which the country can be grateful is that now at last a realistic programme has been put forward and contained in the National Plan which can be maintained and carried out between now and 1970.

Mr. Maudling: If the burdens proposed in the Conservative Government's programme were too heavy, why did the party opposite promise so much more?

Mr. Callaghan: The right Gentleman will know, if he read our manifesto, that we specifically warned the country about the burdens which the Conservative Party was placing on it, and we gave first priority in the short run to closing the balance -of-payments gap we said would exist. It is all very well for the party opposite to say, "Rubbish ", but this is true. Let hon. Members opposite read our manifesto. I read theirs; let them read ours. The right hon. Gentleman will find it there.
We have borrowed a very great deal. The total is £900 million—that is from the I.M.F. That is £100 million more than the deficit for last year. Hon. Members will recognise that we are still running a deficit this year. I have never attempted to disguise that fact from the House, but I say that, by contrast with 12 months ago, whereas then the balance-of-payments deficit was getting worse every month, this year it is getting better every month.
If we are to judge the performance, whereas in September and October of 1964, gold and dollars were flowing out of the country, in September and October, 1965 they have been flowing into the country. Whereas at that time the £ was at pretty well its lowest basement level, today it is standing higher than parity. Whereas last year exports were pretty well flat, this year they are running at a level of nearly 6 per cent. higher. And I would remind hon. Gentlemen opposite that the flow of imports has been staunched by some of the measures which hon. Members opposite have condemned right from their inception.
Therefore, because of these measures, because of the improvement on the capital account—which in the full year

is at least £150 million—we are able to say to the House and the country that now we can see our way clear to having a balance-of-payments deficit that will certainly be no more than half of last year's—but still a deficit; there is still a lot to do—towards the end of next year, if we continue with our existing policies —and I emphasise this, whatever fun hon. Members opposite make about them —we can see the deficit being removed. This is a target worth putting in front of the country.

What the Opposition have failed to demonstrate during the last week is any constructive alternative to the Government's policy which is resulting in a broad economic, social and political advance. For the first time in his political life the right hon. Gentleman finds himself out of sympathy and out of tune with a great deal of industrial thinking in this country. There is a salutary lesson for the Conservative Party here. Right hon. and hon. Members opposite have lost the allegiance of a great many industrialists, who are impatient with the kind of unconstructive criticism of the Government—a Government which, whatever their shortcomings, have at least presented a coherent plan for social, economic and political progress.

That is why, in my view and in my judgment, this Government are destined for a long period of office and—especially as long as hon. Members opposite go on quarrelling among themselves—the Tories are destined for a long period of opposition. The hon. Member for The Wrekin probably knows the latest Conservative sticker: "Don't blame me—I voted Maudling". I ask the House to reject the Amendment by an overwhelming majority.

Question put, That those words be there added: —

The House divided: Ayes 268, Noes 280.

Division No. 2.]
AYES
[10.0 p.m.


Agnew, Commander Sir Peter
Barber, Rt. Hn. Anthony
Birch, Rt. Hn. Nigel


Alison, Michael (Barkston Ash)
Barlow, Sir John
Black, Sir Cyril


Allan, Robert (Paddington, s.)
Batsford, Brian
Blaker, Peter


Allason, James (Hemel Hempstead)
Beamish, Col. Sir Tufton
Bossom, Sir Clive


Amery, Rt. Hn. Julian
Bennett, Sir Frederic (Torquay)
Box, Donald


Anstruther-Gray, Rt. Hn. Sir W.
Bennett, Dr. Reginald (Gos. &amp; Fhm)
Boyd-Carpenter, Rt. Hn. J.


Astor, John
Berkeley, Humphry
Boyle, Rt. Hn. Sir Edward


Atkins, Humphrey
Berry, Hn. Anthony
Brewis, John


Awdry, Daniel
Biffen, John
Brinton, Sir Tatton


Baker, W. H. K.
Biggs-Davison, John
Bromley-Davenport,Lt.-Col.SirWalter


Balniel, Lord
Bingham, R. M.
Brooke, Rt. Hn. Henry




Brown, Sir Edward (Bath)
Harrison, Col. Sir Harwood (Eye)
Orr, Capt. L. P. s.


Bruce-Gardyne, J.
Harvey, Sir Arthur Vere (Macclesf'd)
Orr-Ewing, Sir Ian


Buchanan-Smith, Alick
Harvey, John (Walthamstow, E.)
Osborn, John (Hallam)


Buck, Antony
Hastings, Stephen
Page, John (Harrow, W.)


Bullus, Sir Eric
Hawkins, Paul
Page, R. Graham (Crosby)


Burden, F. A.
Hay, John
Percival, Ian


Butcher, Sir Herbert
Heald, Rt. Hn. Sir Lionel
Peyton, John


Buxton, Ronald
Heath, Rt. Hn. Edward
Pickthorn, Rt. Hn. Sir Kenneth


Campbell, Cordon
Hendry, Forbes
Pike, Miss Mervyn


Carlisle, Mark
Higgins, Terence L.
Pitt, Dame Edith


Carr, Rt. Hn. Robert
Hiley, Joseph
Price, David (Eastleigh)


Cary, Sir Robert
Hill, J. E. B. (S. Norfolk)
Prior, J. M. L.


Channon, H. P. G.
Hirst, Geoffrey
Quennell, Miss J. M.


Chataway, Christopher
Hobson, Rt. Hn. Sir John
Ramsden, Rt. Hn. James


Chichester-Clark, R.
Hogg, Rt. Hn. Quintin
Rawlinson, Rt. Hn. Sir Peter


Clarke, Brig. Terence (Portsmth, w.)
Hopkins, Alan
Redmayne, Rt. Hn. Sir Martin


Cole, Norman
Hordern, Peter
Rees-Davies, W. R.


Cooke, Robert
Hornby, Richard
Renton, Rt. Hn. Sir David


Cooper, A. E.
Hornsby-Smith, Rt. Hn. Dame P.
Ridsdale, Julian


Cooper-Key, Sir Neill
Howard, Hn. G. R. (St. Ives)
Roberts, Sir Peter (Heeley)


Cordle, John
Howe, Geoffrey (Bebington)
Rodgers, Sir John (Sevenoaks)


Corfleld, F. V.
Hunt, John (Bromley)
Roots, William


Costain, A. P.
Hutchison, Michael Clark
Russell, Sir Ronald


Courtney, Cdr. Anthony
Iremonger, T. L.
St. John-Stevas, Norman


Craddock, Sir Beresford (Spelthorne)
Irvine, Bryant Godman (Rye)
Scott-Hopkins, James


Crawley, Aldan
Jenkin, Patrick (Woodford)
Sharpies, Richard


Crosthwaite-Eyre, Col. Sir Oliver
Jennings, J. C.
Shepherd, William


Crowder, F. P.
Johnson Smith, G. (East Grinstead)
Sinclair, Sir George


Cunningham, Sir Knox
Jones, Arthur (Northants, S.)
Smith, Dudley (Br'ntf'd &amp; Chiswick)


Curran, Charles
Jopling, Michael
Smith, J. L. E. (London, W'minster)


Currie, G. B. H.
Joseph, Rt. Hn. Sir Keith
Smyth, Rt. Hn. Brig. Sir John


Dalkeith, Earl of
Kaberry, Sir Donald
Spearman, Sir Alexander


Dance, James
Kerby, Capt. Henry
Speir, Sir Rupert


Davles, Dr. Wyndham (Perry Barr)
Kerr, Sir Hamilton (Cambridge)
Stainton, Keith


d'Avigdor-Goldsmid, Sir Henry
Kllfedder, James A.
Stanley, Hn. Richard


Dean, Paul
Kimball, Marcus
Stodart, Anthony


Deedes, Rt. Hn. TV. F.
King, Evelyn (Dorset, S.)
Stoddart-Scott, Col. Sir Malcolm


Digby, Simon Winglield
Kirk, Peter
Studholme, Sir Henry


Doughty, Charles
Kitson, Timothy
Summers, Sir Spencer


Douglas-Home, Rt. Hn. Sir Alec
Lagden, Godfrey
Talbot, John E.


Drayson, G. B.
Lambton, Viscount
Taylor, Sir Charles (Eastbourne)


du Cann, Rt. Hn. Edward
Lancaster, Col. C. G.
Taylor, Edward M. (G'gow.Cathcart)


Eden, Sir John
Langford-Holt, Sir John
Taylor, Frank (Moss Side)


Elliot, Capt. Walter (Carshalton)
Legge-Bourke, Sir Harry
Teeling, Sir William


Elliott, R. W.(N'c'tle-upon-Tyne,N.)
Lewis, Kenneth (Rutland)
Temple, John M.


Emery, Peter
Lloyd,Rt.t-ln.Ceoffrey(Sut'nC'dfiela)
Thatcher, Mrs. Margaret


Eyre, Reginald
Lloyd, Ian (P'tsm'th, Langstone)
Thomas, Sir Leslie (Canterbury)


Farr, John
Lloyd, Rt. Hn. Selwyn (Wirral)
Thomas, Rt. Hn. Peter (Conway)


Fell, Anthony
Longbottom, Charles
Thompson, Sir Richard (Croydon, S.)


Fisher, Nigel
Longden, Gilbert
Thorneycroft, Rt. Hn. Peter


Fletcher-Cooke, Charles (Darwen)
Loveys, W. H.
Tilney, John (Wavertree)


Foster, Sir John
Lucas, Sir Jocelyn
Turton, Rt. Hn. R. H.


Frascr,Rt.Hn.Hugh(St'fford &amp; Stone)
McAdden, Sir Stephen
Tweedsmuir, Lady


Fraser, Ian (Plymouth, Sutton)
MacArthur, Ian
van Straubenzee, W. R.


Gammans, Lady
Maclean, Sir Fitzroy
Vaughan-Morgan, Rt. Hn. Sir John


Gardner, Edward
Macleod, Rt. Hn. lain
Walder, David (High Peak)


Gibson-Watt, David
McMaster, Stanley
Walker, Peter (Worcester)


Giles, Rear-Admiral Morgan
McNair-Wilson, Patrick
Walker-Smith, Rt. Hn. Sir Derek


Gilmour, Ian (Norfolk, Central)
Maddan, W. F. M.
Wall, Patrick


Gilmour, Sir John (East Fife)
Maginnis, John E.
Walters, Dennis


Glover, Sir Douglas
Maude, Angus
Weatherill, Bernard


Glyn, Sir Richard
Maudling, Rt. Hn. Reginald
Webster, David


Godber, Rt. Hn. J. B.
Mawby, Ray
Wells, John (Maidstone)


Goodhart, Philip
Maxwell-Hyslop, R. J.
Whitelaw, William


Goodhew, Victor
Maydon, Lt.-Cmdr. S. L. C.
Williams, Sir Rolf Dudley (Exeter)


Gower, Raymond
Meyer, Sir Anthony
Wills, Sir Gerald (Bridgwater)


Grant, Anthony
Mills, Stratton (Belfast, N.)
Wilson, Geoffrey (Truro)


Grant-Ferris, R.
Miscampbell, Norman
Wise, A. R.


Gresham Cooke, R.
Mitchell, David
Wolrige-Gordon, Patrick


Grieve, Percy
Monro, Hector
Wood, Rt. Hn. Richard


Griffiths, Eldon (Bury St. Edmunds)
More, Jasper
Woodhouse, Hon. Christopher


Griffiths, Peter (Smethwick)
Morgan, W. G.
Woodnutt, Mark


Gurden, Harold
Morrison, Charles (Devizes)
Wylie, N. R.


Hall, John (Wycombe)
Mott-Radclyffe, Sir Charles
Yates, William (The Wrekin)


Hall-Davis, A. G. F.
Munro-Lucas-Tooth, Sir Hugh
Younger, Hn. George


Hamilton, Marquess of (Fermanagh)
Murton, Oscar



Hamilton, M. (Salisbury)
Neave, Airey
TELLERS FOR THE AYES:


Harris, Frederic (Croydon, N.W.)
Nicholls, Sir Harmar
Mr. Martin McLaren and


Harris, Reader (Heston)
Nugent, Rt. Hn. Sir Richard
Mr. Francis Pym.


Harrison, Brian (Maldon)
Onslow, Cranley








NOES


Abse, Leo
Greenwood, Rt. Hn. Anthony
Mellish, Robert


Albu, Austen
Gregory, Arnold
Mendelson, J. J,


Allaun, Frank (Salford, E.)
Grey, Charles
Mikardo, Ian


Alldritt, Walter
Griffiths, David (Rother Valley)
Millan, Bruce


Allen, Scholefield (Crewe)
Griffiths, Rt. Hn. James (Llanelly)
Miller, Dr. M. S,


Armstrong, Ernest
Griffiths, Will (M'chester, Exchange)
Molloy, William


Atkinson, Norman
Gunter, Rt. Hn. R. J.
Monslow, Waiter


Bacon, Miss Alice
Hale, Leslie
Morris, Alfred (Wythenshawe)


Bagier, Gordon A. T.
Hamilton, James (Bothwell)
Morris, Charles (Openshaw)


Barnett, Joel
Hamilton, William (West Fife)
Morris, John (Aberavon)


Beaney, Alan
Hamling, William (Woolwich, W.)
Mulley,Rt.Hn.Frederick(SheffieldPk)


Bence, Cyril
Harper, Joseph
Murray, Albert


Benn, Rt. Hn. Anthony Wedgwood
Harrison, Walter (Wakefield)
Neal, Harold


Bennett, J. (Glasgow, Bridgeton)
Hart, Mrs. Judith
Newens, Stall


Binns, John
Hattersley, Roy
Noel-Baker,Rt.Hn.Philip(Derby,S.)


Bishop, E. s.
Hazell, Bert
Norwood, Christopher


Blenkinsop, Arthur
Herbison, Rt. Hn. Margaret
Oakes, Gordon


Boardman H.
Hobden, Dennis (Brighton, K'town)
Ogden, Eric


Boston, Terence
Holman, Percy
O'Malley, Brian


Bottomley, Rt. Hn. Arthur
Horner, John
Oram, Albert E. (E. Ham, S.)


Bowden, Rt, Hn. H. W. (Lelcs S.W.)
Houghton, Rt. Hn. Douglas
Orbach, Maurice


Boyden, James
Howarth, Harry (Wellingborough)
Orme, Stanley


Braddock, Mrs. E. M.
Howell, Denis (Small Heath)
Oswald, Thomas


Bradley, Tom
Howie, W.
Owen, Will


Bray, Dr. Jeremy
Hoy, James
Padley, Walter


Broughton, Dr. A. D. D.
Hughes, Cledwyn (Anglesey)
Page, Derek (King's Lynn)


Brown, Rt. Hn. George (Belper)
Hughes, Emrys (S. Ayrshire)
Paget, R. T.


Brown, Hugh D. (Glasgow, Provan)
Hughes, Hector (Aberdeen, N.)
Palmer, Arthur


Buchan, Norman (Renfrewshire, W.)
Hunter, Adam (Dunfermline)
Pannell, Rt. Hn. Charles


Butler, Herbert (Hackney, C.)
Hunter, A. E. (Feltham)
Pargiter, G. A.


Butler, Mrs. Joyce (Wood Green)
Hynd, H. (Accrington)
Park, Trevor (Derbyshire, S.E.)


Callaghan, Rt. Hn. James
Hynd, John (Attercliffe)
Parker, John


Carmichael, Neil
Irvine, A. J. (Edge Hill)
Pavitt, Laurence


Carter-Jones, Lewis
Jackson, Colin
Pearson, Arthur (Pontypridd)


Castle, Rt. Hn. Barbara
Janner, Sir Barnett
Peart, Rt. Hn. Fred


Chapman, Donald
Jay, Rt. Hn. Douglas
Pentland, Norman


Coleman, Donald
Jeger, George (Goole)
Perry, Ernest G.


Conlan, Bernard
Jeger,Mrs.Lena(H'b'n&amp;St.P'cras,S.)
Popplewell, Ernest


Corbet, Mrs. Freda
Jenkins, Hugh (Putney)
Prentice, R. E.


Cousins, Rt. Hn. Frank
Jenkins, Rt. Hn. Roy (Stechford)
Price, J. T. (Westhoughton)


Craddock, George (Bradford, S.)
Johnson, Carol (Lewisham, S.)
Probert, Arthur


Crawshaw, Richard
Johnson, James(K'ston-on-Huil,W.)
Pursey, Cmdr. Harry


Cronin, John
Jones, Dan (Burnley)
Randall, Harry


Crosland, Rt. Hn. Anthony
Jones.Rt.Hn.Sir Elwyn(W.Ham,S.)
Rankin, John


Crossman, Rt. Hn. R. H. S.
Jones, J. Idwal (Wrexham)
Redhead, Edward


Cullen, Mrs. Alice
Jones, T. W. (Merioneth)
Rees, Merlyn


Dalyell, Tam
Kelley, Richard
Reynolds, G. W.


Darling, George
Kenyon, Clifford
Rhodes, Geoffrey


Davies, C. Elfed (Rhondda, E.)
Kerr, Mrs. Anne (R'ter &amp; Chatham)
Richard, Ivor


Davies, Harold (Leek)
Kerr, Dr. David (W'worth, Central)
Roberts, Albert (Normanton)


Davies, lfor (Gower)
Leadbitter, Ted
Roberts, Goronwy (Caernarvon)


Davies, S. 0. (Merthyr)
Ledger, Ron
Robertson, John (Paisley)


Delargy, Hugh
Lee, Rt. Hn. Frederick (Newton)
Robinson, Rt. Hn.K.(St.Pancras, N.)


Dell, Edmund
Lee, Miss Jennie (Cannock)
Rodgers, William (Stockton)


Dempsey. James
Lever, Harold (Cheetham)
Rose, Paul B.


Diamond, Rt. Hn. John
Lever, L. M. (Ardwick)
Ross, Rt. Hn. William


Doig, Peter
Lewis, Arthur (West Ham, N.)
Rowland, Christopher


Donnelly, Desmond
Lewis, Ron (Carlisle)
Sheldon, Robert


Driberg, Tom
Lipton, Marcus
Shore, Peter (Stepney)


Duffy, Dr. A. E. P.
Lomas, Kenneth
Short, Rt.Hn.E.(N'c'tle-on-Tyne,C.)


Dunn, James A.
Loughlin, Charles
Short, Mrs. Renee (W'hampton.N.E.)


Dunnett, Jack
Mabon, Dr. J. Dickson
Silkin, John (Deptford)


English, Michael
McCann, J.
Silkin, S. C. (Camberwell, Dulwich)


Ennals, David
MacColl, James
Silverman, Sydney (Nelson)


Ensor, David
MacDermot, Niall
Skeffington, Arthur


Evans, Alhert (Islington, S.W.)
McGuire, Micheel
Slater, Mrs. Harriet (Stoke, N.)


Evans, loan (Birmingham, Yardley)
Mclnnes, James
Slater, Joseph (Sedgefield)


Finch, Harold (Bedwellty)
McKay, Mrs. Margaret
Small, William


Fitch, Alan (Wigan)
Mackenzie, Gregor (Rutherglen)
Smith, Ellis (Stoke, S.)


Fletcher, Sir Eric (Islington, E.)
Mackie, John (Enfield, E.)
Soskice, Rt. Hn. Sir Frank


Fletcher, Ted (Darlington)
McLeavy, Frank
Sprlggs, Leslie


Fletcher, Raymond (Ilkeston)
MacMillan, Malcolm
Stonehouse, John


Floud, Bernard
MacPherson, Malcolm
Stones, William


Foley, Maurice
Mahon, Peter (Preston, S.)
Strauss, Rt. Hn. G. R. (Vauxhall)


Foot, Sir Dingle (Ipswich)
Mahon, Simon (Bootle)
Stross,SlrBarnett(Stoke-on-Trent,C.)


Foot, Michael (Ebbw Vale)
Mallalieu, E. L. (Brigg)
Summerskill, Hn. Dr. Shirley


Fraser, Rt. Hn. Tom (Hamilton)
Mallalieu,J.P.W.(Huddersfield,E.)
Swain, Thomas


Freeson, Reginald
Manuel, Archie
Swingler, Stephen


Galpern, Sir Myer
Mapp, Charles
Symonds, J. B.


Garrett, W. E.
Marsh, Richard
Taylor, Bernard (Mansfield)


Garrow, Alex
Mason, Roy
Thomas, George (Cardiff, W.)


Ginsburg, David
Maxwell, Robert
Thomas, lorwerth (Rhondda, W.)


Gourlay, Harry
Mayhew, Christopher
Thomson, George (Dundee, E.)







Thornton, Ernest
Wellbeloved, J.
Wilson, Rt. Hn. Harold (Huyton)


Tinn, James
Wells, William (Walsall, N.)
Wilson, William (Coventry, S.)


Tomney, Frank
White, Mrs. Eirene
Winterbottom, R. E.


Tuck, Raphael
Whitlock, William
Woodburn, Rt. Hn. A.


Urwin, T. W.
Wigg, Rt. Hn. George
Woof, Robert


Varley, Eric G.
Wilkins, W. A.
Wyatt, Woodrow


Wainwright, Edwin
Willey, Rt. Hn. Frederick
Zilliacus, K.


Walker, Harold (Doncaster)
Williams, Alan (Swansea, W.)



Wallace, George
Williams, Clifford (Abertillery)
TELLERS FOR THE NOES:


Warbey, William
Williams, Mrs. Shirley (Hitchin)
Mr. Sydney Irving and


Watkins, Tudor
Williams, W. T. (Warrington)
Mr. George Lawson.


Weitzman, David
Willis, George (Edinburgh, E.)

Main Question put and agreed to.

Resolved,
That an humble Address be presented to Her Majesty, as follows:
Most Gracious Sovereign,
We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland, in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.

To be presented by Privy Councillors or Members of Her Majesty's Household.

SUPPLY

Committee to consider of the Supply to be granted to Her Majesty, Tomorrow. —[Mr. Short.]

WAYS AND MEANS

Committee to consider of the Ways and Means for raising the Supply to be granted to Her Majesty, Tomorrow. [Mr. Short.]

CENSUS OF DISTRIBUTION

10.15 p.m.

The Minister of State, Board of Trade (Mr. George Darling): The Minister of State, Board of Trade (Mr. George Darling) rose—

Mr. Speaker: Order. Will hon. Members leave the Chamber quietly?

Mr. Darling: I beg to move.
That the Census of Distribution (1967) (Restriction on Disclosure) Order 1965, a draft of which was laid before this House on 22nd July, in the last session of Parliament, be approved.
This Order relates to the Census of Distribution which is to be taken by the Board of Trade in 1967 in respect of trade done in 1966. It is concerned with one limited aspect of that census—the non-disclosure of information about particular undertakings. Under the Statistics of Trade Act, disclosure of particulars about individual undertakings is generally prohibited, but there are exceptions. The President of the Board of Trade may direct information to be passed to other Government Departments for the purpose of exercising their functions and information may also be disclosed for the purpose of proceeding in respect of offences under the Statistics of Trade Act.
The Act empowers the Board of Trade to impose further restrictions on the disclosure of information about particular undertakings, and the present Order is submitted as a proposed exercise of those powers. In effect, it prohibits the disclosure of information obtained from individual undertakings to other Government Departments except with the written permission of the firms concerned. It does this by prohibiting all disclosure of information about particular undertakings except for the immediate purpose of census returns and for the purpose of prosecuting offences under the Act, for instance the furnishing of false returns. In this way everyone can be sure that the information which they give will be treated in the strictest confidence. The Order is on the same lines as those made in connection with all the three previous censuses, and I therefore hope that the House will approve it.

10.18 p.m.

Mr. Patrick Jenkin: It is comforting that my first appearance at the Dispatch Box should

be on a matter which is wholly uncon-troversial and should also be accompanied by the virtue of total evacuation of the Chamber.
As the Minister of State said, this Order is confined to one very limited aspect of the provisions of the Statistics of Trade Act, 1947, but I agree with him that it is a very important aspect. It is interesting to note that on the last two occasions on which very similar Orders were debated before the censuses took place, the debates were extremely short, in no case exceeding more than half a column of the OFFICIAL REPORT, and on one occasion the Order went through this House on the nod. I will, therefore, be extremely brief.
There is a need, indeed a growing need, for full, up-to-date and accurate statistics of trade. Whatever one's view may be on central Government planning, everyone must agree that there is a need for more information in our modern and highly complex economy. It is, therefore, of the highest importance that the business community should co-operate to the full in giving this information, because it is they and only they who have it within their power to provide this information. They are the only source of the figures upon which this information may be based. This applies particularly to distribution. The 1961 census showed that there were nearly 600,000 different establishments carrying on a trade to a value of nearly £9,000 million and employing over 2½ million people—by far the biggest sector of our economy. If this cooperation from the business community is to be procured, the figures which they provide must be treated as confidential. Indeed, I would say that not only must they be treated as confidential; they must manifestly be known to be treated as confidential.
Section 9(1) of the 1947 Act allowed disclosure to other Government Departments. As the Minister of State said, subsection (3) gave the Board of Trade power by Order to extend this restriction, and this is what the Order which we are debating in fact does. There is to be no disclosure of individual returns except for the purpose of taking the census and providing any report or survey following on it. That seems to me to be absolutely right. I would say that it is essential.
But I have for the Minister of State— and I should be grateful if he would deal with them—one question and one request. The question is this: Section 9(5) of the 1947 Act deals with the use of the information provided by the census for the purpose of preparing reports, summaries and other communications to the public. That subsection, too, provides the restrictions which must be observed. In the first place, there is to be no disclosure about concerns if the number of returns is fewer than five. The reason for this is obvious: it would give away information, possibly valuable commercial information, to competitors. Secondly, there must be no identification of the particulars relating to any one person or undertaking.
This is the question which I should be most grateful if the Minister of State would answer: would he confirm that the Order which we are discussing in no way overrides the provisions of subsection (5). Paragraph 1(a) of the Order provides for one of the exceptions to the rule against disclosure
for the purpose of preparing or providing, in relation to or in connection with that census, any survey, report, summary or other communication required by fee said Act.—
I am sure that this is right, but I should be grateful for his confirmation that the restrictions to which I referred, contained in subsection (5), are in fact left entirely unaffected, that they still stand and will apply.
My request is for an assurance, which I am certain the hon. Gentleman is able to give, that the requirements both of the Act and of the Orders passed under it are strictly observed in practice. I am sure that this is so but it is right that it should be publicly stated by a Minister at the Department responsible and should be stated on the Floor of this House.
The whole exercise rests on trust— the trust which those who make the returns have in the secrecy with which those returns are treated—and they are

entitled to be reassured publicly that their trust is indeed well placed.
With these few remarks, I conclude by welcoming the Order as a necessary and entirely proper piece of machinery relating to the forthcoming census of distribution.

10.23 p.m.

Mr. Darling: With permission, Mr. Deputy Speaker, I will reply to the hon. Gentleman, but to begin with I should like to congratulate him on his first appearance at the Dispatch Box. I think that over the years ahead he and I will be facing each other in some capacity or other, but from our present positions, and no doubt we shall cross swords about many contentious things. But this Order is non-contentious. The hon. Gentleman asked for an undertaking about what will happen under subsection (5). I give him a categorical assurance that the provisions under that subsection will be scrupulously observed in the preparation of the reports, as in the past.
I also welcome this opportunity on the Floor of the House to make it clear to the traders that there will be no disclosure of individual information that would identify firms or any disclosure of information outside the scope of the Act and the Order. In addition, when we have the Order in operation—and this is the purpose of the exercise—it will enable the Board of Trade to give traders who receive the forms for the census the strongest possible assurance that their returns will be treated in the strictest confidence.
Thus, we are giving them two public assurances. The first is in this House through the opportunity that the hon. Gentleman has given us and the other will be in the forms sent out.

Question put and agreed to.

Resolved,
That the Census of Distribution (1967) (Restriction on Disclosure) Order 1965, a draft of which was laid before this House on 22nd July, in the last Session of Parliament, be approved.

ANTI-DUMPING ORDER (SACCHARIN)

10.27 p.m.

The Minister of State, Board of Trade (Mr. George Darling): I beg to move,
That the Anti-Dumping Duty Order 1965 (Si, 1965, No. 1599), dated 16th August 1965, a copy of which was laid before this House on 23rd August, in the last Session of Parliament, be approved.
I hope; that this Motion will be equally non-contentious.
This Order has been made under the Customs Duties (Dumping and Subsidies) Act, 1957, and is concerned with saccharin, an artificial sweetener mainly used in the production of soft drinks. Hon. Members may not have appreciated that. I understand that the saccharin that we who are trying to slim put in our tea or coffee forms a fairly small part of total consumption.
The Order imposes anti-dumping duties of l0d. per lb, on saccharin originating in Japan and 5s. per lb. on saccharin originating in the Republic of Korea. In accordance with normal practice, the Order also provides for importers to obtain relief from the duties under Section 3 of the Act in respect of consignments which the importers can show are not dumped or are not dumped to the full extent of the duty.
As the House knows, before duties can be imposed under the Act the Board of Trade must be satisfied not only that dumping is taking place but also that it is causing or threatening material injury to a British industry and that the antidumping action would be in the national interest. In this case, the application was made by Boots Pure Drug Company Ltd., and Monsanto Chemicals Ltd., which are responsible for all the saccharin produced in Britain.
When the Board of Trade was satisfied that there was prima facie evidence that imports from Japan and the Republic of Korea were dumped and were threatening material injury, a public announcement was made on 5th March inviting representations from interested parties. Then, after a detailed investigation, in which all the evidence submitted was fully taken into acount, my right hon. Friend the President of the Board of Trade was satisfied that imports of

saccharin originating in Japan and the Republic of Korea were dumped, that these dumped imports constituted a clear and imminent threat of material injury to the British industry and that the imposition of anti-dumping duties would be in the national interest.
The House will appreciate that it is impossible to give detailed reasons for our findings, since these were based on commercial and financial information given to the Board of Trade in the strictest confidence, and, in the same way as the previous Order imposed confidence upon us, so it is with this operation. But I assure the House that the Board has investigated the case very carefully, including the costs and returns of the British producers, and is satisfied that, if no action had been taken, the British industry would have had to make substantial and seriously uneconomic price reductions in order to avoid losing a large part of the domestic market to dumped imports. The duties came into force under this procedure on 24th August. In announcing the decision, the Board of Trade gave a general warning that if imports of saccharin originating in other countries were found to be dumped, they, too, would be liable to anti-dumping action.

10.30 p.m.

Mr. Peter Emery: I join with the Minister of State in congratulating my hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) on his first appearance at the Dispatch Box. There are many hon. Members who would have been only too delighted to have made the progression from back benches to the Dispatch Box in 12 months, that is to say, as quickly as my hon. Friend. I, too, expect to be crossing swords with the Minister of State for a number of years, but I believe that his hope about present positions is an artificial sweetener. He is much more likely to find himself on this side of the House than staying where he is.
Can the Minister tell the House approximately how much of the saccharin and salts had been brought into the country, or, if that is confidential information, the approximate percentage of overall production? That is important so that it can be seen that anti-dumping action is taken only when


necessary and not when imports are just a small irritation to domestic producers.
There seems to be a vast divergence between the rates of duty. Can the Minister say that the rates of duty are likely to bring the products of the two countries concerned to approximately the same sale price once unloaded in this country?
The obvious thing about the Order is that the Government are following a policy brought about by the Conservative Government, but as a bipartisan policy, to ensure that there should be no unfair dumping of chemicals in this country. The policy was in furtherance of the British chemical industry, but neither side wants to ensure that we build up barriers or that there is featherbedding or protection. We on this side of the House would not want that in any way. If we can have answers to my questions, we shall be more than happy to support the Order.

Mr. Darling: By leave of the House; I do not think that giving the percentage of saccharin and salts which are dumped as against total production in this country would meet the case. This is industrial saccharin and not that which is sold retail to domestic consumers. The method of selling is on contract a long period ahead. The difficulty which the industry faced was the prospect of further dumping when contracts were being made over a period of time. I do not have the figures with me in a form in which they could be disclosed, but we might be able to answer the hon. Gentleman's question in a way which does not disclose confidential information, and I will certainly look into that.
The reason for the difference between the two duties is quite simple. It is the different margins by which the imports from the two countries were found to be dumped. In other words, it is due to the difference between the Japanese and the Korean domestic and export prices. The third point is really a question of efficiency of the industry. Because there is an element of monopoly

here, the Board of Trade has looked into this very carefully indeed.

Mr. Peter Emery: Duopoly.

Mr. Darling: The hon. Member can put it that way if he likes. I have always found, when there are two firms, that it is best to talk of monopoly, but I will not quarrel with the hon. Member. Because there is this duopoly, or monopoly, the Board of Trade has looked at the efficiency of the industry very carefully, particularly its cost of production, and the prices which it charges. We have no reason at all to believe that British producers are not efficient. They are constantly improving their plant—and we have evidence of this. We have had to take some measurement as to what the prices should be, but we understand that the saccharin prices in this country are just about the same as those in the United States of America, and we thought that, in view of the American industry's efficiency, this was a good yardstick.
I am quite confident, from the discussions the Board of Trade has had with the two firms concerned, that they are not hiding behind this anti-dumping law and that nothing will be done by either firm to increase prices to the consumer. The whole purpose of the exercise is to keep prices stable, and thus to see if benefits can be passed on to the customer by the increasing efficiency of the two firms. I am sure that from the assurances that we have had we need have no qualms about this.

Question put and agreed to.

Resolved,
That the Anti-Dumping Duty Order 1965 (S.I., 1965, No. 1599), dated 16th August 1965, a copy of which was laid before this House on 23rd August, in the last Session of Parliament, be approved.

UNIVERSITIES (SCOTLAND) BILL

Order for Second Reading read.

Bill referred to the Scottish Grand Committee.—[Mrs. Hart.]

PORTBURY DOCK SCHEME

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Fitch.]

10.38 p.m.

Mr. Martin McLaren: Portbury is a place in the constituency of my hon. Friend the Member for Somerset, North (Mr. Dean) and I have naturally consulted him before initiating this debate. I am the Member for Avonmouth, one of the dock Members on this side of the House. The Port of Bristol Authority, which owns the Avon-mouth Docks, has made a proposal for the construction of a new dock system across the River Avon at Portbury, which would mean an extension of Avonmouth and of the Port of Bristol.
This scheme is technically a "harbour scheme", within the meaning of the Harbours Act, 1964 and it is necessary to apply for, and to obtain the consent of, the Minister of Transport to it. My object in raising the matter is to ask for that consent, and to ask for it without delay. May I first set out the national advantages which I believe the scheme has to offer?
In the first place, it will offer exceptional communications by motorway. It will be on the M.5, the Birmingham to Exeter motorway, close to its junction with the M.4, London to South Wales motorway, and there will be excellent motorway communications to the Midlands and to the North, to South Wales over the Severn Bridge, and to London and the Home Counties. The result of this is that the hinterland of the port, that is, the area to and from which trade will be attracted, will be much wider than anything that the Port of Bristol has hitherto commanded, and this means that our export potential will be increased. A quick traffic flow will be assured. One can envisage quite a new situation such as we have never before seen in this country, of heavy lorries flowing along the motorways through the countryside right into the dock system instead of having to thread their way through congested streets, as they would have to do, for example, in the case of any of the South Wales ports.
Secondly, a new port on this side of the country should draw off traffic which

ought naturally to flow in that direction, but which at present clogs the London docks and contributes to the heavy traffic problem in the London area. Thirdly, Bristol has the advantage over London of about 200 miles shorter distance on all ocean routes.
Fourthly, Portbury would be a natural part of the development plan for the South-West. Bristol is becoming a regional centre and is developing rapidly as an administrative and commercial headquarters, and decentralisation from London would be assisted. Fifthly, at Portbury there is available undeveloped meadowland offering a unique opportunity for the layout of a new dock on the most modern lines, with plenty of space for further development and for all the ancillary purposes and industrial trading estates which should be associated with a modern dock.

Mr. Paul Dean: Would my hon. Friend agree also that there is a very substantial residential development not very far away from the proposed dock and that another very good reason for an early decision on this is that the people who live in this vicinity are extremely worried about their future prospects in the state of indecision which exists at the moment?

Mr. McLaren: I quite agree with my hon. Friend. He has made a perfectly valid point. People who live in that part of the world naturally want to know what will happen. That is why we are pressing for an early decision.
I was saying that this really ought to be a planners' paradise, untrammelled by any kind of existing development. It is essential for a modern port to have ample space for assembly areas, for components and unitised loads, particularly in the export trade. Portbury offers two or three times as much space per berth as some other projects, and yet Portbury would have the advantage of being close to Avonmouth with its existing supply of skilled dock labour and efficient port management. The whole scheme is the brain child of a port authority with an assured record of success behind it. So that in that way one would combine the asset of the open countryside with the asset of having a complex of facilities needed by an efficient port.
Sixthly, the undertaking would be financially self-supporting and would cast no burden on the rates or on the Exchequer. I hope that this list will show how many advantages the scheme possesses.
Now I turn, briefly, to the past history of the matter. I will take as my starting point the appointment in 1961 of the Rochdale Committee by my right hon. Friend the Member for Wallasey (Mr. Marples). That Committee reported in July, 1962. One of the main points which it brought out was the need for a properly planned programme of port development which could provide additional deep-water berths, in view of the rapidly increasing size of ships.
In the Bristol Channel, one of the facts of geography from which one cannot escape is that the deep water happens to run close to the Somerset side, whereas on the South Wales side it is shallow, and a great deal of dredging would be needed for a dock to accommodate large modern ships. This is a main reason why the dock development should go to Portbury rather than to any of the South Wales ports. The fears which have been expressed in South Wales about Portbury have been misplaced because surely a successful Portbury will bring prosperity to the whole region and to both sides of the Bristol Channel.
I now look at the way in which the point about deep-water berths was expressed in the Rochdale Committee Report. I quote from paragraphs 616 and 617:
One thing that seems to us beyond doubt— we make no apology for repeating this—is that this country needs more deep water berths. … There is a danger that British ports will become inadequate to cater for modern vessels which … are steadily increasing in size; indeed, their adequacy is already in doubt. The seriousness of this danger cannot be overemphasised.
The Committee went out of its way to say some agreeable things about the port of Bristol.It said:
Bristol has expanded its trade considerably in recent years and we should like to pay tribute to this achievement which reflects great credit on the zeal and efficiency of the Authority itself and its permanent staff. One of the results of their enterprise is that the port's deep water berths are working at or near capacity already. There is a prospect of even

more business in the area, including an increase in exports, as a result of such developments as the improvement of road communications with the Midlands and I.C.I.'s new petro-chemicals plant at Severnside, north of Avonmouth. This has led the port authority to consider providing completely new dock facilities at Portbury on the Bristol Channel between Avonmouth and Portishead.
Following the main recommendations of that Committee, the National Ports Council was set up and the Harbours Act was passed. It was to the National Ports Council that the report on the Portbury scheme was submitted by Bristol in May, 1964, 18 months ago. Later some further information was asked for by the Council and eventually, in July this year, the scheme was included with a favourable recommendation in the interim plan for port development submitted by the National Ports Council to the Minister.
This is my best quotation, the blessing of the National Ports Council, which is to be found in paragraph 139 of its interim plan. It says:
The proposal for constructing a new dock at Portbury is the subject of a separate submission by the Council to the Minister of Transport, in which the Council recommend that the Minister's approval for the scheme should be given. The Council are of the opinion that the advantages of the scheme are that it would produce a number of really deep water berths at which completely new facilities could be constructed incorporating modern ideas, that development at Bristol would provide useful relief for the pressures on London and Liverpool which can be expected to emerge by the time that the first stage of the Portbury scheme can be brought into operation, and that the new dock would have unrivalled road communications when the Severn Bridge, M4 and M5 are complete.
In the synopsis the interim plan says:
In the Council's view the schemes …
Schemes including Portbury—
are urgently necessary and should go ahead as quickly as possible. Even so it will be some time before many of them bear fruit. It is virtually certain that additional schemes will have to be put forward during the next few years as the need for improved and extended port facilities becomes more clearly seen.
This warning is added:
The Council are satisfied that there is no danger of over-investment in these proposals. The arrears are serious and the prospective growth of traffic considerable.
In the National Plan—which is the holy of holies—the interim plan is adopted and accepted. The Plan states that major


investment in 14 ports, including Port-bury, has been recommended and adds:
Much other investment will also be needed ".
That implies that the programme for at least 14 ports can go forward without delay.
Against that background we had every reason to think that the approval of the Minister would shortly follow, but our complaint is that it has still not been given. The National Ports Council is the body set up by the Government to be experts on the subject. It has gone into all these schemes in great detail— from a financial, economic and commercial point of view—and has assessed the relative merits of one scheme against another.
I suggest that one may apply the homely maxim; if one has a dog one need not bark oneself. In other words, if the work has already been done by the National Ports Council, why should the Government go all over it again? Meanwhile, what has been happening since the interim plan was submitted? What was going on all through July, August, September, October and November and how much longer must we wait?
In a recent Answer to a Question from my hon. Friend the Member for Bristol, West (Mr. Robert Cooke), it was stated that it was hoped to announce a decision shortly. The word "shortly" is a favourite with civil servants and in their vocabulary it means "Whenever we feel inclined ". It might mean a week or a year.
There are urgent reasons why early approval should be given. The longer the Government delay the more we will have to face increasing costs and competition for the technical resources, which will be strained to the limit in coping with all the major works recommended in the interim plan and which will be going on more or less simultaneously.
Avonmouth is now bursting at the seams, so to speak, and there is not an acre of land available for further development on that side of the river. It is all the more important, therefore, that we should have Portbury to cope with our expanding trade. The trend towards larger bulk carriers—of 30,000 tons or more— means that these ships are too large to get through the lock gates at Avon-

mouth or to be accommodated anywhere in the existing port.
We are not supposed to know what goes on while the Government are considering the matter, but I can lift the veil to some extent and tell the House that an inter-departmental committee was set up, with representatives of the Ministry of Transport, the Department of Economic Affairs, the Board of Trade and the Treasury, and that they have been examining the project in a somewhat leisurely style, asking the National Ports Council at intervals for further statistics. We know what happens at these sort of meetings. At the end of them they get out their diaries, find there is no early day convenient to them all and a date two or three weeks further on is fixed.
That sort of thing is not good enough. These were not the methods which made Bristol the city of merchant adventurers in the past.

Mr. Robert Cooke: Hear, hear.

Mr. McLaren: It is a shame that our initiative and enterprise should be shackled by this lack of decision in Whitehall. Indignation is mounting in Bristol in all quarters—in the Chamber of Commerce and even in the Government's own recently appointed Regional Economic Planning Council, the chairman of which, Professor Tress, was recently reported as saying that he and his colleagues had not accepted membership just for the fun of drawing up plans which were not likely to be turned into action. The Press has been critical. The time has come when we demand and deserve a decision.
It all comes back to what was referred to in yesterday's debate—the inability of the Minister of Transport to take decisions. As my right hon. Friend the Member for Ashford (Mr. Deedes) put it, the Minister of Transport has been overtaken by events and is not even aware of that fact. He ought to recapture the power to make decisions, or he should go. The whole national Press sees him as one of the weakest links in the Treasury Bench chain. To do justice to an old friend of mine, the Parliamentary Secretary, I believe that he would do the job a lot better himself.

10.56 p.m.

Mr. W. A. Wilkins: I imagine that this is one of those rare


occasions when hon. Members representing the Bristol constituencies find themselves in some degree of harmony. In that remark I might include the hon. Member for Somerset, North (Mr. Dean) and the hon. Member for Weston-super-Mare (Mr. Webster). I do not know whether the hon. Member for Weston-super-Mare wants us to build deep-water docks there; if so, a lot of mud will have to be cleared out of the way. Nevertheless, we welcome his interest.
I do not at all dissent from the statements of the hon. Member for Bristol, North-West (Mr. McLaren), but I have always had some doubt about the best way of achieving what one really wants. I believe that one can press a Minister so hard as to make him commit himself to just the kind of thing one does not want. In other words, I have usually thought it better to go about things quietly rather than bring them into the light of day.
The former Minister of Transport, the right hon. Member for Wallasey (Mr. Marples), presented the Rochdale Report to this House almost with a flourish of trumpets. Strangely enough, after all the criticism to which we have listened in the last few days about planning, the right hon. Gentleman referred to that Report as a major national plan. I have with me the notes I made on that occasion, among which the following appears: "When someone is converted to a new faith he strangely becomes more fervent than the missionaries who converted him." That was my comment on the Minister's presentation of the Rochdale Report.
My hon. Friend the Parliamentary Secretary can take it as perfectly true that there is concern—a sort of restlessness amounting almost to anxiety—in the City of Bristol about this development we want at Portbury. Some of that concern arises from the fact that the Bristol Channel—or the estuary, as the Rochdale Report calls it—ports such as Liverpool have suddenly come to life when they have seen the possibilities of some proposal for new deep-water berths, which the Report emphasise again and again are a vital necessity for our economic needs in the exporting and importing of goods.
It is rather surprising that such ports should now be making representations to my right hon. Friend and telling him how very well suited they are for the provision of deep-water berths. The people of Bristol feel just a little hurt about it, because we were making these plans five years ago. Five years ago, this scheme was on the drawing board. It is reasonable to suggest that, if it had not been for the Rochdale Committee's findings and the introduction of the Measure which vested authority in someone to suggest what the plan should be, it might well have been that Bristol would have presented this to the House of Commons and asked for permission to build these deep-water berths. It is almost certain that the Minister would have conceded that permission, had it not been for the promulgation of the new idea suggested by the Rochdale Committee.
I want to make only one reference to the Rochdale Report. Although it is only five lines, it is an all-embracing passage which emphasises or proves why Bristol is such a desirable place for these deep-water berths. I hope that it will be the full half-dozen and not merely two. Paragraph 62 of the Report says:
In selecting particular ports for development certain factors must of course be borne in mind. e.g. the particular needs of certain areas, the absolute necessity of good communications, development potential "—
that is a very important factor in Port-bury—
the cost of impounding and dredging, etc. One most important factor, as we have suggested in the previous paragraph, is the possibility of providing deep water berths.
In short, all these facilities are freely available in this area. There is no compensation to be paid. The land is there. Every opportunity for carrying through the project is there. There is no necessity for compensation. It is an ideal site for deep-water berths. I hope that the Minister will come to his decision very shortly.

11.2 p.m.

The Joint Parliamentary Secretary to the Ministry of Transport (Mr. Stephen Swingler): I was worried about getting over-generous to Bristol. First, I want to pay my tribute to the municipally owned port of Bristol. I yield to nobody in my admiration of successful public


enterprise. We ought on all possible occasions to encourage successful public enterprise such as has been shown at Bristol. The hon. Member for Bristol, North-West (Mr. McLaren) speaks quite rightly against the perspective of grossly inadequate capital investment in ports and docks over the last few years. That is the basis from which this scheme springs. Under the previous Administration there was a totally inadequate rate of capital investment in ports and docks.
The case for Portbury, put by the hon. Member for Bristol, North-West and as recommended to us by the N.P.C., is an attractive case. We have urgently to consider it. It must not be assumed that it is a cast-iron case. There are other possibilities. My right hon. Friend, who is responsible for the policy of capital investment in ports and docks throughout the country, must consider and evaluate all possibilities. He must consider the relationship between the Portbury scheme as suggested and other ports in the area— for example, the South Wales ports. We must weigh the claims made by Cardiff. Some of the supporters of Cardiff maintain that that port could be developed into an up-to-date liner terminal at a cost many millions less than the Portbury scheme.
I am not tonight pronouncing on the merits of these various claims. What I am emphasising is that the Government would not be doing their duty if they did not very seriously examine all aspects of the differing proposals which are put forward.
The case for Portbury in essence is the need for a third major liner terminal port to help us in handling the large increase in our imports and exports which might otherwise keep London and Liverpool in a permanent state of congestion.
If we accept this need—I accept it— we must ask ourselves if Portbury is the right place to do it, if we should accept the recommendation of the N.P.C. There is Southampton, one of our most important passenger and cargo ports. Its claims cannot be overlooked. We have, with the

Department of Economic Affairs and other Departments, to look at the recommendation made to us by the N.P.C, at future traffic trends, at road and rail access, at room for the development of facilities for handling traffic in containers, and so on. We have to study all these considerations in judging the various claims which are put forward and recommended to us by the N.P.C, which was the body appointed for the purpose.
The scheme for Portbury is undoubtedly imaginative and forward-looking. We do not doubt that it would meet an important need. Nor do we underestimate in any way the understandable impatience of Bristolians because of the time which has elapsed since the scheme was first put forward. To a large extent that has been because of the appointment of the National Ports Council and the reference of the scheme to that Council. But we have been considering the scheme only since July, a comparatively short time when one thinks of the commitment to a very large sum which we are considering. It is a very important capital investment which would commit us to a certain kind of development and no doubt exclude developments in other places.
This is therefore a decision of considerable magnitude, not to be under estimated when we think of the millionsof pounds which would be involved. It is natural that a few months are required to study the recommendations of the National Ports Council, to consult its experts and to establish the proper relationship between its recommendation and other recommendations. But there will not be very much delay, and nothing like the delay of years which there has been during which totally inadequate—

The Question having been proposed after Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at eight minutes past Eleven o'clock.